USD/JPY extends recovery momentum further beyond 103.00 handle

Having dipped below Friday's low, the USD/JPY pair managed to recover all of its lost ground and has now moved back into positive territory, inching back closer to 100-day SMA.

Currently trading around 103.40 level, the pair has now fully priced-in Friday's disappointing US monthly jobs report that showed addition of 156K new jobs in September and unemployment rate ticking higher to 5.0%. 

Improving investor appetite for riskier assets - like equities, as depicted by gains in European markets, is driving flows away from the perceived safety of the Japanese Yen. 

Moreover, Friday's comments from Cleveland Fed President Loretta Mester reinforced market expectations of an eventual Fed rate-hike action by the end of this year and is helping the US Dollar to recover from early losses led by improvement in Donald Trump's performance at the second presidential debate that curbed investor risk-appetite during early Asian session on Monday.

With a scheduled bank holiday in the US in observance of Columbus Day, the pair might continue to be driven by the prevalent risk sentiment around equity markets and overall greenback performance, as measured by the US Dollar Index. 

Technical outlook

Slobodan Drvenica, Information & Analysis Manager Windsor Brokers Ltd., notes, "Initial support lies at 102.79, where today’s action found footstep, ahead of more significant 102.58 level (Fibo 38.2% of 100.05/104.15 rally). Firm break here is needed to trigger further correction and expose breakpoints at 102.10/04 (daily Tenkan-sen/Kijun-sen bull cross / daily cloud base). Extended dips should be contained here to keep overall bulls in play, otherwise, sustained break below daily cloud will confirm lower top at 104.15 and signal further weakness."

"Res:  103.31; 103.64; 103.97; 104.15
Sup:  102.79; 102.58; 102.10; 101.61"