USD/JPY bounces back to 107.00 neighborhood

   •  Easing threats of an immediate US attack on Syria helped revive risk appetite on Thursday.
   •  Hawkish FOMC meeting minutes further underpin the USD and help regain positive traction.

The USD/JPY pair gained some positive traction on Thursday and has now bounced back closer to the 107.00 handle. 

Against the backdrop of US-China trade conflicts, escalating geopolitical tensions underpinned the Japanese Yen's safe-haven and prompted some fresh selling on Wednesday. However, threats of an immediate US attack on Syria eased after Trump reportedly did not settle on a plan with Defense Secretary Jim Mattis and revived investors' risk appetite, eventually helping the pair to catch some fresh bids on Thursday. 

This coupled with a hawkish assessment of the latest FOMC meeting minutes extended some support to the US Dollar and further collaborated to the pair's modest recovery bounce. 

Looking at the broader picture, the pair has been oscillating within a narrow trading range since the beginning of this week and once again managed to rebound from the 106.65-60 support area. Hence, it would be prudent to wait for a decisive break below the mentioned support before positioning for any further near-term depreciating move.

Today's US economic docket, highlighting the release of weekly initial jobless claims, is unlikely to act as a game changer but might still help traders grab some short-term opportunities.

Technical outlook

Omkar Godbole, Editor an Analyst at FXStreet writes, “a bull flag breakout would signal continuation of the rally from the March 25 low of 104.63 and open the door to 110.35 (target as per the measured height method). Also, the 50-MA, 100MA and 200MA are aligned for a bullish move. Further, the 5-day MA and the 10-day MA are trending north - indicating a bullish setup.”

“However, the rally to 110.00 could be short-lived as the 5-week MA and 10-week MA are falling (biased bearish). On the downside, a daily close below 105.57 (200-month MA) would abort the bullish view, while a move below 104.63 (recent low) would revive the bearish view,” he adds further.