USD/JPY recovers majority of early lost ground to mid-108.00s

The USD/JPY pair has managed to recover majority of its early lost ground to fresh weekly lows and might now be looking to move back above the 109.00 handle. 

Currently trading around the 108.75 region, the pair remained under some selling pressure for the third consecutive session and touched an intraday low of 108.50 during early Asian session amid intensifying tensions between the US and North Korea.

   •  Trump on N.Korea, what's the latest? - ANZ

Adding to this, Tuesday comments from various Fed officials, sounding cautious on the central bank's policy tightening path further collaborated to the greenback's weakness and dragged the pair closer to 4-month lows touched last week. 

However, a modest pull-back around the key US Dollar Index, coupled with disappointing average cash earnings data from Japan helped the pair to recover from session lows. 

With broader market risk sentiment turning out to be a key drive of the pair's movement, traders would try and grab some short-term trading opportunities from today's release of US ISM non-manufacturing PMI, due for release later during the NA session.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "The pair is clearly bearish, poised to extend its decline towards 108.12, the yearly low as the first bearish target to consider. In the 4 hours chart, the price has accelerated well below its 100 and 200 SMAs, whilst technical indicators keep heading lower near oversold readings, supporting further declines on a break below 108.60, the immediate support."