USD/JPY testing the 109 handle but lacks impact

Currently, USD/JPY is trading at 109.09, down -0.11% on the day, having posted a daily high at 109.23 and low at 109.05.

A subdued market in Asia today has the yen pressuring the109 the figure with little force. The markets overnight were choppy and there has been some confusion over Dudley's remarks that were not any help for the dollar bulls. Initially, he said that inflation would move towards the 2% target in the medium term but then separately he said that the 2% target may not be achievable in the medium term due to previous quarter's and their low inflation readings.

Forex Daily Outlook: What You Need to Know for Friday

"Markets remained risk-averse amid the US-Nth Korea tensions, benefitting safe-havens such as gold, the yen, and US treasuries; and hurting equities (S&P down 1.4%)," explained analyst at Westpac. Subsequently, US 10yr treasury yields fell from 2.25% to 2.20% - a one-month low. "In addition to the risk averse mood, there was a soft PPI inflation report to help depress yields. Fed dove Dudley sounded upbeat on the economy, causing a temporary bounce," explained the analysts at Westpac. 

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that from a technical point of view, the pair gives no sign of changing course, despite being oversold. "In the 4 hours chart, technical indicators are hovering near oversold readings, but the price keeps posting lower lows, while moving further below bearish 100 and 200 SMAs. The immediate support is 108.80, June's low, with a break below the level favoring an extension down to 108.12 this year's low set last April," Bednarik noted.