USD/JPY consolidates the recovery below 109.50

Having faced rejection just shy of 109.50 barrier, the USD/JPY pair entered a phase of consolidation, as the bulls take a breather after the overnight rebound from four-month lows of 108.58.

USD/JPY: Focus shifts to the Jackson Hole Symposium

Despite persistent strength seen in the US dollar against its major peers, the USD/JPY pair failed to take on the recovery above 109.50 levels, as the recovery in the risk sentiment appears to falter amid a retreat in the European equities.

However, the move lower in the spot remains capped, in response to strengthening Treasury yields, especially the shorter-duration yields, which gain momentum amid expectations that the Fed Chair Yellen will throw some hawkish hints on the rate hike plans at the Jackson Hole Symposium commencing this Thursday.

In the meantime, the major awaits the second-tier US macro data for fresh incentives, while focus shifts towards the Japanese and US manufacturing PMI releases due tomorrow.

USD/JPY Technical levels                 

To the topside, a daily close above 10-DMA located near 109.50 would shift risk in favor of a re-test of 109.93 (20-DMA/ round number) beyond which 110.37 (Aug 17 high) would be back on sight. A break below 109 (zero figure) would open doors for 108.58 (multi-month low). A break lower would yield a test of 108.11 (April lows).