USD/JPY rebounds from monthly lows, but stays below 107

Having bottomed out near 106.40 region in the opening trades, the USD/JPY pair attempts recovery and looks to regain 107 handle, tracking a broad based US dollar bounce after poor NFP data led massive slide.

USD/JPY trades below all major DMAs

The USD bulls appear to fight back control in the Asian morning, allowing a minor pullback in the USD/JPY pair from just over four-week lows struck earlier at 106.38. At the time of writing, USD/JPY advances 0.26% to 106.83, testing fresh session highs posted at 106.87 last minutes.

The USD/JPY pair plummeted nearly 250 pips last Friday, following an awful NFP reading, which re-ignited concerns over the strength of the US economic recovery and washed away any chance for a June/July Fed rate hike. Subsequently, the USD index dropped to new three-week lows at 93.86 and dragged USD/JPY lower, while EUR benefited the most from the extensive USD sell-off.

Markets now eagerly await Fed Chair Yellen’s comments due later in the NA session, for more insights on the US interest rates outlook, particularly after dismal US employment data released last week. While labour market conditions index from the US will be also eyed.

USD/JPY Technical levels to watch

In terms of technicals, the immediate resistance is located at 107 (round number). A break above the last, the major could test 107.68 (5-DMA). While to the downside, the immediate support is seen at 106.38 (Monthly Low) and below that at 106 (psychological levels).