USD/JPY spikes to session tops amid notable USD demand

A fresh wave of greenback buying interest seems to have emerged during mid-European session, lifting the USD/JPY pair to fresh session tops near 109.75-80 region.

The latest Fed decision to raise interest rates by 25 basis points and hawkish outlook, despite of the recent US data disappointment, underpinned the US Dollar demand on Thursday and helped the pair to built on overnight recovery move from nearly two-month lows.

Meanwhile, the prevalent risk-off environment, as depicted by steep losses in European equity markets, was seen lending support to the Japanese Yen and kept a lid on further up-move, at least for the time being.

Moreover, investors might refrain from carrying big positions ahead of the BoJ monetary policy decision, due for release during Asian session on Friday, might also contribute towards cappint the pair below the key 110.00 psychological mark.

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Next on tap would be the US economic docket, featuring the release of manufacturing data and weekly jobless claims, which would be looked upon for some short-term trading impetus.

Technical levels to watch

Momentum above the 110.00 handle is likely to confront supply near 110.25-30 area, which is closely followed by resistance around mid-110.00s. On the downside, weakness back below mid-109.00s now seems to drag the pair below session lows support near 109.30-25 region towards testing the 109.00 handle.