USD/JPY - US debt deal ensured the dip below 50% fib was short lived

The three-month extension of the debt ceiling in the US lifted the USD/JPY pair to a high of 109.40, ensuring the support at 108.72 [50% Fib R of 2016 low - Dec 2016 high] remains intact. 

The Fibonacci level has been repeatedly put to test for more than a month now, although dips below the same have been short lived. Essentially, a sideways range of 110.95-108.50 has been established. 

The currency pair dipped to 108.45 yesterday; the lowest level since August 29. However, the bid tone around the USD gathered pace in the NY session after a report hit the wires that President Trump struck a deal with Democratic congressional leaders on Wednesday to increase the debt limit and finance the government until mid-December, blindsiding his own Republican allies. 

The debt deal would avert a fiscal showdown later this month, although many believe Trump has simply kicked the can down the road. 

The yen has regained the bid tone in Asia, pushing the USD/JPY down to 109.00 levels. Reports are doing the rounds that North Korea may fire a missile on September 9 and that could be keeping the Yen well bid. 

USD/JPY Technical Levels 

"The spot clocked a session low of 108.89 earlier today and currently trades around 109.05 levels.  FXStreet Chief Analyst Valeria Bednarik writes-

“Technically, the recovery remains corrective, as despite the almost 100 pips' advance, the pair remains below its moving averages in the 4 hours chart, also below the 23.6% retracement of the July/August decline, this last around 109.75. Technical indicators in the mentioned chart have bounced sharply from oversold readings, but remain within negative territory, overall indicating that the upward potential is limited at least as long as the price remains below the mentioned Fibonacci resistance.”