USD/JPY retreats from tops, back below 109.00 handle

The USD/JPY pair trimmed some of its early strong gains and has now retreated around 30-pips from session tops, back around the 109.00 handle.

The pair's intraday recovery of over 80-pips already seems to have run out of steam, despite a goodish pickup in the US Dollar demand. A fresh wave of selloff across European equity markets was seen underpinning the Japanese Yen's safe-haven demand and eventually capping any further gains.

The pair, however, has managed to find some minor support near the 109.00 handle. Moreover, the recent price-action, wherein the pair recently has been attracting fresh buying interest on dips towards mid-108.00s, now seems to suggest that bulls could be in the process of forming a short-term bottom.

However, it would be prudent to wait for a strong follow-through recovery before confirming that the pair has actually bottomed out and is poised to extend the recovery move in the near-term. 

In absence of any major market moving economic releases, the pair remains at the mercy of broader market risk sentiment. Nevertheless, the pair still remains poised to end with weekly losses for the fourth time in the previous five.

Technical levels to watch

A follow-through retracement below 108.75 level is likely to drag the pair back towards mid-108.00s, below which might turn vulnerable to aim back towards testing the 108.00 handle. On the upside, 109.30 level, followed by the 109.70-75 region might continue to act as immediate resistance levels, which if cleared should lift the pair beyond the key 110.00 psychological mark towards 110.30-50 supply zone.