USD/JPY: Yen drops to session lows near 121.30, safe-haven bids fade

FXStreet (Mumbai) - The risk-off sentiment persisting across the FX space during early European trades appears to have faded now, thus diminishing yen’s allure as a safe-haven asset and lifting USD/JPY to fresh session highs above 121.30 levels.

USD/JPY trims losses

Currently, the USD/JPY pair trades -0.30% lower at 121.34, recovering from lows reached at 120.88 in Asia. The major manages to recover lost ground somewhat as the risk-aversion fuelled by China stocks crash seems to have eased, boosting the demand for newly crowned risk currency - the US dollar.

Earlier this session, the yen remained strongly bid after renewed wave of risk-aversion amid persisting concerns over the Chinese economic performance as equities across Asia suffered losses.

However, the correction in the USD/JPY pair is expected to remain short-lived as the USD bulls are likely to jump back into the bids later this week with the US non-farm payrolls data closely watched for fresh cues on Fed interest rate-hike timings.

USD/JPY Technical levels to consider

To the upside, the next resistance is located 121.67 (Today’s High) levels and above which it could extend gains 122.04 (Aug 24 High) levels. To the downside immediate support might be located at 120.41 (Aug 25 High) below that at 120 (Psychological levels).