USD/JPY: Kicking off the Tokyo session on the front foot, rallies > 20 pips

• USD/JPY is better bid in Tokyo on Friday, rallying on the open from 109.12 to a high of 109.33 so far. 
• USD/JPY got a risk-on boost on Wall Street, with benchmarks in the green and US yields rising. 

USD/JPY started off the day overnight down at 108.68 and went on to score a NY session high of 109.40 following speculation that the Sino/US trade spat was about to be resolved due to headlines that Treasury Sec. Mnuchin was in favour of lifting the tariffs in a bid to calm markets and ease tensions with Beijing. 

However, there were conflicting headlines reporting that the Treasury said there were no recommendations made on tariffs.  And then, coupled with heightened tensions over the arrest of Huaweii CFO Meng and China's retaliation two Canadians arrested as a consequence, risks are far more skewed towards prolonged trade wars than a finding a resolution to them anytime soon. 

US stocks end in the green

Elsewhere, data releases were scant but the rebound in the January Phili Fed index provided the US stock market with some support. The DJIA erased an earlier loss, ended higher by 102 points, or 0.4%, at 24,309. The S&P 500 index added 12 points, or 0.5%, to 2,627 and the Nasdaq Composite finished 31 points higher, or by 0.5%, to 7,066.

USD/JPY levels

• Support levels: 108.65 108.30 107.90          
• Resistance levels: 109.40 109.85 110.10

Valeria Bednarik, the Chief Analyst at FXStreet, explained that the pair is has broken above the 61.8% retracement of its latest daily decline, also above the 100 SMA, which extended its decline to converge with the mentioned Fibonacci retracement at around 109.05:

"Technical indicators in the mentioned chart hold within positive ground, although without clear upward momentum, easing modestly from their highs. As said on previous updates, the current 109.20 price zone is a strong static resistance that the pair needs to clearly surpass to be able to extend its gains, as it is the level in where the pair was trading ahead of December flash crash."