USD/JPY: Recovers to 105.00 as Nikkei moves-off lows

The bears loosened grip somewhat post-China open, allowing a minor-recovery in the USD/JPY pair back towards 50-DMA located at 105 handle.

USD/JPY: Yen bulls take a breather

The bid tone behind the Japanese currency weakened a bit as we move towards mid-Asia, lifting USD/JPY from fresh weekly lows struck at 104.78 in the last hour.

The tepid-bounce in the major can be largely attributed to a minor-recovery staged by the Japanese stocks. Further risk-off appears to have cooled-off slightly as the oil prices turned positive this session. At the time of writing, the USD/JPY pair recovers to 105 handle, still down -0.75% on the day, while the Nikkei 225 index drops -1.25% to 16,413, recovering from a dip to 16,344 levels.

Earlier on the day, headlines crossed the wires via Bloomberg that the Japanese stimulus draft calls for continued cooperation with the BOJ. However, the headlines did little to move the yen bulls.

Amid another quiet Asian economic calendar, risk trends continue to drive markets, as focus now shifts towards the US dataflow due later in the day. While FOMC and BOJ decision remain the main highlight for the week ahead.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 105.79/83 (5 & 10-DMA). A break above the last, the major could test 106 (round number). While to the downside, the immediate support is seen at 104.16 (20-DMA) and below that at 103.89 (Jul 13 low).