USD/JPY hits fresh highs above 109.00 but loses strength

• USD consolidates gains across the board. 
• USD/JPY recovers at a modest pace. 

The USD/JPY pair rose above 109.00 but the upside was limited so far. It printed a fresh daily high at 109.18 and then pulled back toward 109.00. 

The US Dollar Index (spot) extended gains on American hours and rose to 89.63, the highest levels in five days, recovering from 3-year lows. The index received a boost from the rally of the Dollar against European currencies, particularly the pound, and the euro. 

The USD/JPY managed to extend gains but in a limited way. The pair was unaffected by US data but then printed fresh highs. As of writing it was trading at 109.05, up 45 pips from Friday’s close. 

The pair continues to consolidate after posting significant losses last week. The main trend continues to point to the downside, although some signals that it might have bottomed out in the short-term at 108.25 last Friday (4-month low) were emerging. The move off lows from took place at the beginning of a busy week that will include the ADP employment report, the FOMC meeting (Wednesday) and the NFP report (Friday). 

USD/JPY Technical levels 

To the upside, resistance levels might be seen at 109.15/20 (Jan 29 high), 109.40 and 109.75 (Jan 26 high). On the flip side, supports could lie at 108.80 (20-hour moving average) and 108.25 (last week low).