USD/JPY drops to session lows on USD sell-off

After refreshing its lowest level since April 25 on early Thursday, the USD/JPY pair was able to make a mild recovery during the day and went into a consolidation phase on Friday, trading in a 60-pip range. However, at the NA opening, the pair came under a renewed selling pressure as the American traders continued to sell their dollars. As of writing, the pair was at 111.15, recording a daily drop of 0.3%.

There are no data to be released during the NA session, and unless the markets get some fresh developments about the political drama that has been going on in the United States since the start of the week, the pair is likely to stay in its recent range.

• US: Political risks remain at the centre stage - BBH

In the meantime, major equity indexes in the U.S. are signaling towards a higher opening after the Asian and European indexes were able to correct previous day's losses. The pair might be able to gather some bullish momentum if the higher risk appetite hurts the demand for the safer JPY. On the other hand, following yesterday's rebound, the US Dollar Index is staying close to its session low around 97.20 and is headed for another daily close with losses, for the fourth time this week, making it harder for the pair to make a meaningful recovery.

• US Dollar tumbles to fresh 6-month lows near 97.20

Technical outlook

The pair could face the immediate resistance at 111.70 (daily high) ahead of 112.30 (100-DMA) and 113 (psychological level). To the downside, supports could be seen at 111.00 (psychological level), 110.25 (May 18 low) and 109.60 (Apr. 25 low).

• USD/JPY could allow for a rebound to 112.00/45 – Commerzbank