Despite buyers having broken above some key resistance levels - 200-day MA (blue line) and 61.8 retracement level - on Wednesday, any further extension higher is encountering a bit of a pause and may yet stay that way as we look to wrap up the trading week.
It is pretty much the same story as yesterday as traders remain more cautious for the time being with US-China trade tensions casting a large shadow over markets in general.
Add to the fact that we are facing with the prospect of more holiday-thin trading today, there is good reason to expect the pair to settle around current levels into the weekend.
As mentioned yesterday, the risk for buyers now is if price starts to fall back towards the 200-day MA @ 108.93 and crawl back under the 109.00 handle. However, I reckon that may require markets to start getting more jittery about a trade deal falling apart.
So far, the HK bill signing has cast some doubts (hence, the more cautious tone in markets) but it hasn't derailed sentiment in a significant manner just yet.
As such, unless we get more of an idea on how things are progressing, USD/JPY may sit steady around these levels as we look to navigate through the day. Looking ahead, there are also about $640m worth of expiries rolling off at 109.30-35 so just be mindful of that.