USD/JPY finds fresh demand near 117.00 handle

The USD/JPY pair caught fresh bids near 117.00 handle and has recovered around 35-pips from session low, still traded with mild bearish bias for the second consecutive session.

Currently trading near 117.30-35 band, growing expectations of further Fed rate-hike action continues to underpin the greenback and limited the pair's corrective slide. However, the prevalent cautious sentiment around equity markets has been lending support to the Japanese Yen's safe-haven appeal, keeping the major on the back foot during early European trading session. 

In absence of any fresh economic data, broader market risk sentiment would continue to be a key driver for the pair's movement on Monday ahead of BoJ monetary policy decision on Tuesday, which might provide some impetus ahead of Christmas holidays. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet, notes, "The weekly RSI is overbought for the first time since May 2015… which suggests potential for correction. However, the correction would gather pace only if the pair breaks below the support offered by the trend line drawn from June 2013 low and July 201 low. The trend line support stands at 117.38, breach of which would add credence to the overbought RSI and open the door to a corrective move lower to 115.00 levels."

He further adds, "Bullish scenario - A rebound from 117.38 followed by a weekly close above the resistance at 118.60 offered by the descending trend line coming from Aug 2015 high and Dec 2015 high. That could mark the continuation of the post-Trump victory rally and open the door to 120.00-121.60 (2016 high)."