USD/JPY remains depressed, holds above mid-108.00s as focus shifts to NFP

• USD/JPY remains under pressure for the second straight session on Friday.
• Conflicting trade-related headlines benefitted the JPY’s safe-haven demand.
• The downside is likely to remain limited ahead of the US monthly jobs report.

The USD/JPY pair extended the previous session's rejection slide from the 109.00 handle and witnessed some follow-through selling on the last trading day of the week.

The pair failed to capitalize on this week's attempted recovery move and continued with its struggled to find acceptance above the very important 200-day SMA amid persistent selling bias surrounding the US dollar. Mixed trade signals, coupled with the recent disappointment from the US macro data kept exerting some pressure on the greenback and turned out to be one of the key factors prompting some fresh selling around the major.

Focus remains on trade developments

On the other hand, the Japanese yen benefitted from reviving safe-haven demand on the back of uncertainty over a potential phase one trade deal between the world's two largest economies, led by a flurry of conflicting headlines. As investors digested Wednesday's report, indicating that the US and China are moving closer to a trade deal before the December 15 tariffs deadline, China reiterated its expectations that tariffs should be lifted as part of any deal.

Adding to the confusion were the US President Donald Trump's recent remarks, saying that talks with China were going very well. This marked a turnaround from the previous day's comments that a deal may not come until after the 2020 US presidential election and continued underpinning perceived safe-haven currencies, including the Japanese yen.

Meanwhile, the downside is likely to remain cushioned as investors might now be reluctant to place any aggressive bets ahead of the release of the closely-watched US monthly employment details. The jobs report, popularly known as NFP and scheduled later during the early North-American session this Friday, will play a key role in influencing the near-term USD price dynamics and eventually provide some meaningful directional impetus.

Technical levels to watch