USD/JPY recovers sharply to move back above 100.00 handle

Having posted a low at 0.9954, the lowest level since the historic UK-EU referendum, the USD/JPY pair has managed to recover nearly 50-pips to currently trade back above 100.00 psychological mark.

Immediately after the release of US CPI report for the month of July, the pair extended its slide further below 100.00 mark before retracing swiftly after New York Fed President Bill Dudley's comments revived hopes of an eventual Fed rate-hike, sooner rather than later. 

In his comments, Dudley argued that the Federal Reserve is moving closer to a rate-hike and that the markets might be under-pricing possibilities of such an action at its September meeting. 

The comments triggered a broad based US Dollar short-covering rally and assisting the pair to recover from nearly 2-month low level touched in the aftermath of slight disappointment from US CPI print. The pair got an additional boost from better-than-expected US industrial production data for the month of July.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "Technically, the 1 hour chart shows that thuasde upward move is corrective, given that the technical indicators are turning modestly higher within oversold readings, whilst the price remains far below its 100 and 200 SMAs. In the 4 hours chart, indicators have lost bearish strength within oversold territory, but are far from suggesting the pair may recover further, while the price is also well below its moving averages, with the 100 SMA extending its decline and now around 102.40."

"Support levels: 99.85 99.50 99.10
Resistance levels: 100.30 100.65 101.00"