USD/JPY on the verge of breaking below 109.00 handle

The USD/JPY pair remained heavily offered and moved on the verge of breaking below the 109.00 handle during early NA session. 

The pair failed to build on overnight recovery gains and failed ahead of the key 110.00 psychological mark amid some renewed US Dollar selling pressure. The greenback turned lower across the board in reaction to the US President Donald Trump's comments on securing funding for a proposed border wall with Mexico and a possible termination of the North American Free Trade Agreement.

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This coupled with a fresh wave of global risk aversion trade further underpinned the Japanese Yen's safe-haven appeal and also collaborated to the pair's sharp pullback of around 80-pips from session tops. 

Against the backdrop of mounting concerns about the Trump administration's ability to deliver on its economic policy agenda, a follow through weakness below the 109.00 handle, back closer to 4-month lows struck last week, now seems a distinct possibility. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "The 4 hours chart shows that the early advance stalled a few pips below a bearish 100 SMA, whilst technical indicators resumed their declines, with the Momentum still neutral but the RSI indicator heading south  around 41, putting the pressure towards the downside. US Treasury yields are holding to modest daily gains, yet a decline there after Wall Street's opening will likely result in a bearish extension on the pair beyond the 108.80 immediate support."