USD/JPY refreshes session low, hangs closer to 5-month low around 200-DMA

The USD/JPY pair came under some renewed selling pressure and is currently placed at the very important 200-day SMA near 108.70 region, closer to multi-month lows touched on Monday.

Spot failed to build on overnight recovery move amid prevalent risk-off mood in wake of rising tensions between the US and North Korea. Adding to this, news of a snap general election in the UK, further boosted the Japanese Yen's safe-haven appeal and collaborated to the pair's retracement from the immediate resistance situated around the 109.20-25 region. 

   •  Theresa May: Election to be held 8th June

Meanwhile, the incoming US economic data now seems to have dampened expectations of a faster Fed rate-tightening cycles. This coupled with the ongoing downslide in the US treasury bond yields further undermined the US Dollar demand and collaborating towards restricting any meaningful recovery for the major.

However, further depreciating move is likely to be limited amid near-term oversold conditions (RSI<30), albeit a follow through selling pressure on yet another disappointment from the US economic docket still remains a distinct possibility.

Technical outlook

"Pair’s retreat from 109.22 followed by a drop below 1-hour 100-MA level of 108.96 coupled with the retreat in the 1-hour RSI from the overbought territory and the failure of the 4-hour RSI to rise above 50.00 levels suggests the spot is likely to take out 200-DMA level of 108.69 and re-test 108.13, under which the falling channel support of 107.85 could be put to test" notes Omkar Godbole, Analyst and Editor at FXStreet.

He further added, "on the other hand, only a close above 109.40 today would add credence to Monday’s sharp rebound and open doors for 110.11 (Mar 27 low)."