USD/JPY retreats from four-month tops, still holding comfortably above 114.00

The USD/JPY pair extended its recent upward trajectory and spiked to four-month highs near mid-114.00s, albeit retreated few pips thereafter.

The pair's continued gaining traction for the third consecutive day and today's up-move was supported by the hawkish comment by FOMC member John Williams, advocating the case for another Fed rate hike action and tapering the central bank's massive balance sheet by the end of this year. 

   •  Fed’s Williams – Latest US jobs report shows US economy is strong

Meanwhile, the BoJ Governor Haruhiko Kuroda on Monday reiterated the need to continue with the central bank's stimulus program. Hence, rising gap between the US and Japanese bond yields further favored the US Dollar and collaborated to the pair's strong up-move to the highest level since mid-March. 

Traders, however, seemed reluctant to take aggressive positions ahead of the Fed Chair Janet Yellen's semiannual testimony to Congress beginning tomorrow, which could shed light on the central bank's near-term monetary policy outlook and drive the greenback in the near-term.

Meanwhile, a mildly positive trading sentiment around European equity markets did little to boost the Japanese Yen's safe-haven appeal and remained supportive of the pair's strong bid tone above the 114.00 handle.

Traders now look forward to the release of US JOLTS job openings data and FOMC member Brainard’s speech for some fresh trading impetus during the NA session.

   •  US: Fed’s Brainard speech in focus - TDS

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "the 4 hours chart shows that technical indicators have retreated modestly from near overbought readings, lacking anyway bearish strength, whilst the price remains well above bullish 100 and 200 SMAs, with the shortest accelerating above the largest. The pair needs to advance beyond  114.40 to be able to extend its gains, up to 115.10 as an initial bullish target."