USD/JPY trims early gains to weekly tops in pre-NFP repositioning trade

The USD/JPY pair surrendered majority of its early gains and retreated around 30-pips from weekly tops near 111.70 region.

A modest retracement in the US treasury bond yields, which undermined the US Dollar demand, seems to be a key factor failing to provide any additional boost to the pair's strong up-move through Asian session. 

Meanwhile, heading into the key event risk - the keenly watched US monthly jobs report, repositioning trade might have also collaborated to the pair's retracement from higher levels. 

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However, a fresh wave of global risk-on trade, with most European equity indices trading with gains in excess of 1.0%, was seen weighing on the Japanese Yen's safe-haven appeal and has helped the pair so far to hold in positive territory for the second consecutive session.

Against the backdrop of recent rhetoric from various FOMC members, the Fed seems all set to go ahead and raise interest rates at its upcoming meeting on June 13-14.

Today's headline NFP print is unlikely to change the course but would be looked upon for some clues over the timing for further rate-hike moves and hence, would now be the next big fundamental trigger helping investors to determine the pair's near-term trajectory.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes, "the USD/JPY has found fresh bids around the upward sloping monthly 50-MA. Despite the retreat from 118.66 (Dec high), the monthly RSI has stayed above 50.00 levels. The monthly MACD also shows the bearish momentum has not gathered pace despite the retreat from 118.66 levels. A strong US wage growth number could yield a fresh rally to 112.28 (100-DMA). A daily close above the same would open doors for a sustained move higher to 114.00 levels.

"Watch for a convincing break above 111.68 (falling trend line hurdle). It would add credence to the rebound from near monthly 50-MA as discussed above and open doors for a rally to 112.28 (100-DMA). Only a daily close below 110.00 would signal continuation of the retreat from the May 11 high of 114.37 levels and shall open doors for a re-test of 108.13" he added further.