USD/JPY hits fresh session high as risk appetite improves

The USD/JPY pair maintained its bid tone and is seen extending its recovery from the vicinity of 100.00 psychological mark, retested on Tuesday.

A broad based recovery in European equity markets boosted investor risk appetite and driving them away from perceived safety of the Japanese Yen. The pair is benefitting from the prevalent risk-on sentiment and is currently trading near session high around of 100.75-80 band.

Despite of its recovery on Wednesday, the recovery seems to lack momentum as market participants already seem to have ruled out possibilities of a Fed rate-hike action in November. Hence, focus would now turn to the Fed Chair Janet Yellen's testimony, later during NY trading session, which might provide fresh clues over the central bank's near-term monetary policy outlook and eventually drive the greenback further from current levels. 

On the economic data front, monthly durable goods orders from the US might provide impetus for short-term traders.

Technical levels to watch

Omkar Godbole, Editor and Analyst at FXStreet, notes, "Pair’s repeated failure to sustain above 101.00 levels and a day end close below 100.71 (50% of 2011 low – 2015 high) adds credence to the possibility of a bearish break below 100.00 levels as suggested by falling top formation despite repeated rebound from 100.00 levels post Brexit. Breach of 100.00 levels on intraday basis could be enough to send prices lower to 99.00 levels."

"Bearish invalidation is seen only if prices see a daily close above 101.24 (Sep 23 high + descending trend line hurdle). Such a move appears likely only if the US data beats estimates by a wide margin, although wobbly equity markets amid banking concerns in Europe could still play a spoil sport."