USD/JPY headed back to session low as USD accelerates downslide

Extending its retracement from 102.50 region, the USD/JPY pair has now erased all of its strong NFP-led recovery gains and is now headed back towards session lows to currently trade around 101.20 region.

Despite of last week's impressive headline NFP print, market seemed unconvinced that the Fed will go ahead and raise interest rates this year after Tuesday's release of downbeat US productivity data.

Meanwhile, a cautious sentiment around equity markets also seems to boost the safe-haven appeal of Yen. Adding to this, a better-than-expected release of core machinery orders data is also extending support to the Japanese currency. 

With an empty economic calendar on Wednesday, the pair would continue to be solely driven by sentiment surrounding the US Dollar and prevalent risk sentiment in equity markets. 

Technical outlook

A team of analysts at AceTrader notes, "upside bias would be seen for gain towards 102.80/83, however, near term loss of momentum would prevent sharp move beyond there and reckon 103.30 would hold and yield retreat."

"On the downside, only below 101.37 (previous resistance) would indicate aforesaid recovery has ended and turn outlook bearish for a re-test of said support later this week."