USD/JPY's rebound from 106.60 stalls below 107.45

• USD/JPY trims losses after a four-day decline and returns to 107.40.
• The yen dips as risk flows return during the Asian and European trading sessions.
• The pair loses steam and consolidates above 107.20 as risk appetite falters.

The US dollar has found support at 106.60 on Friday to set a base after a 2.5% sell-off during the previous four days. The brighter market sentiment and a string of negative Japanese indicators might have helped the dollar to regain lost ground before hitting resistance at 107.45 area.

The yen loses ground as risk flows return

The dollar has taken advantage of brighter market sentiment on Friday, which has triggered solid advances in equity markets during the Asian and European trading sessions. Risk appetite has weighed on the safe-haven yen, which lost ground against riskier currencies like the euro, British pound or Australian dollar, and pushed the USD back to levels past 107.00.

The pair lost steam as the risk sentiment faded during the US session. Dollar’s recovery hit resistance at 107.45 area and has consolidating since, with downside attempts contained above 107.20.

USD/JPY: In an upward correction from oversold levels

Valeria Bednarik, Chief Analyst at FXStreet considers the recent move a corrective reaction and points out to 107.80 to confirm the correction, “The USD/JPY pair is in corrective mode, after reaching extreme oversold conditions,  just above the 23.6% retracement of its latest slump at 107.33. The 38.2% retracement of the same decline comes at 107.80, a possible bullish target should the corrective advance continues.”