USD/JPY recovery capped at 101.00 handle

A tepid US Dollar recovery on Wednesday is seen helping the USD/JPY pair to extend its rebound from yesterday's mid-99.00 level touched in the aftermath of US economic releases on Tuesday. The pair, however, has trimmed around 40-pips from session peak and is currently trading around 100.75 level. 

The pair on Tuesday remained under intense selling pressure on fading expectations of an imminent Fed rate-hike action in 2016. Adding to this, US CPI data, showing prices remained flat during July, further aggravated the downslide. However, hawkish comments from New York Fed president William Dudley provided a temporary respite for bulls and helped the pair to rebound from post-Brexit lows touched during early NA trading session on Tuesday. 

Ahead of the key event risk, FOMC meeting minutes that would shed light over the Fed's monetary policy outlook, the current pull-back of nearly 150-pips could also be attributed to some profit-taking after the pair's recent slide to hit a fresh 2-month lows. 

Technical levels to watch

On a sustained recovery above 101.00 handle, a fresh bout of short-covering seems to assist the pair to reclaim 102.00 level with intermediate resistance at 101.50-55 area. However, any further recovery above 102.00 area might continue to confront strong resistance at 102.45-50 region, which if conquered would negate any near-term bearish bias and open room for continuation of the pair's near-term recovery trend. 

Meanwhile, 100.25 level now seems to protect immediate downside, below which the pair seems to drop back below 100.00 psychological mark and drop back to Tuesday's low support near 99.50 region before heading towards testing Brexit swing lows support near 99.00 region.