USD/JPY reversing Wednesday's early drop as risk appetite returns

• Yen jumps on Cohn resignation, market sentiment soured briefly.
• Mid-tier macro data for Japan due at 05:00 GMT could boost risk appetite.

The USD/JPY is back on the climb after a quick tumble in the overnight session, testing into 105.85 as of writing.

The Yen is walking back after gaining in a quick round of risk aversion during the overnight session, and market sentiment seems to be swinging back. Markets took a quick plunge in early Wednesday trading following an announcement that Mark Cohn, Donald Trump's top economic advisor, will be resigning from his position at the White House. The move is widely believed to be predicated on Trump's planned tariffs, which fly in the face of Cohn's free-market approach, but Cohn has so far remained mute on the issue.

Japan will be seeing preliminary January figures for the Leading Economic Index and Coincident Index at 05:00 GMT. A slight decline is anticipated in both figures, with the Leading Index forecast to print at 106.2 (versus 107.4 previous), and the Coincident Index is anticipated at 119.5 (previous 120.2). A positive beat to the figures may inversely impact the Yen, sparking confidence higher and sending the Yen lower on risk appetite.

USD/JPY Technicals

The pair is still deeply into bearish territory, and today's drop following Cohn's resignation announcement has pushed the USD/JPY down and away from the 8 EMA on Daily candles, while H4 charts show plenty of room to run lower with a new lower high pricing in off of 106.35. Intraday support can be found at 105.55 and 105.25, while resistance has been growing from 106.45 to 107.10.