USD/JPY retakes 108.00 handle, still mildly lower

The US Dollar bulls took a breather on Tuesday, with the USD/JPY pair reversing part of Monday's strong gains to five-month high. 

Currently trading around 108.15 region, the pair initially dipped below 108.00 handle amid prevalent cautious sentiment, which tends to benefit the Japanese Yen's safe-haven appeal. The initial weakness to session low level of 107.80, however, seemed short-lived as increasing odds of a December Fed rate-hike continues to underpinning the greenback and limiting any sharp corrective slide for the major. 

Focus now shifts to the US economic docket featuring the release of monthly retail sales and Empire State Manufacturing Index later during NA session. 

From technical perspective, Monday's sharp up-move could be attributed to short-covering on a sustained move above 200-day SMA. However, with daily RSI (above 70), pointing to near-term overbought conditions, the pair might witness some profit taking move or consolidation around five month highs before the next leg of directional move. 

Technical levels to watch

From current levels, 108.50-55 (Monday's high) might continue to act as immediate resistance above which the pair is likely to surpass 109.00 handle and dart towards 109.20 horizontal resistance area. On the flip side, weakness below session low support might now find support near 107.40 level. Any further slide below 107.40 is likely to be limited around the very important 107.00 handle.