USD/JPY recovers back above mid-110.00s

The USD/JPY pair pared some of its early sharp losses led by geopolitical tensions after US bombed a Syrian airbase and has now managed to recover back above mid-110.00s.

A fresh wave of global risk-aversion trade emerged on Friday after the US President Donald Trump ordered to strike a Syrian airbase, which was used to launch deadly chemical weapons on civilians. Investors boosted demand for traditional safe-haven assets, including the Japanese Yen, which eventually dragged the pair back closer to over 4-month lows touched last week.

As the dust settled, strong US economic fundamentals, reinforced by this week's ADP report, helped the pair to recover majority of its early lost ground. The US Dollar remained supported by market expectations for yet another blockbuster official jobs report (NFP) for the month of March, due for release later during the NA session on Friday.

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Any further recovery, however, is likely to be limited amid prevalent cautious sentiment in wake of the Trump-Xi summit, where an adverse outcome has the potential to trigger a fresh bout of volatility across global financial markets.

Technical levels to watch

Currently trading around 110.65 region, any further recovery beyond 110.80 level might continue to confront resistance near the 111.00 handle, above which a bout of short-covering has the potential to lift the pair towards weekly high resistance near 111.45 level.

On the flip side, multi-month lows near the 110.15-10 region remains immediate support to defend, below which the pair is likely to extend the near-term downslide towards 109.20 support area with some intermediate support near 109.75-70 zone.