USD/JPY continues to struggle but holding its gains to 107.00

The USD/JPY pair seems to struggle in building on to its recovery gains and has now stagnated around 107.00 handle as investors now await for fresh impetus from the Fed Chair Janet Yallen's speech later during NY session.

The pair is attempting a minor recovery after last week's sharp slide of over 4% from a 5-week high level of 111.35 to a 4-week low level of 106.37 touched earlier on Monday and was led by disappointment from a couple of top-tier macro indicators from the US (job numbers and ISM services PMI).

Expectations of a Fed rate-hike might now have been pushed further beyond July, with the CME Group's Fedwatch tool now showing just 4% probability of June action and around 30% of such a move in the month of July.

Investors now look forward to today's Fed Chair Janet Yellen's last public appearance, before the central bank's monetary policy meeting on June 14-15, in order to get further insight over the Fed's outlook on the economy and determine the timing of next Fed action.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "Monday´s recovery seems merely a short-lived correction, as in the 1 hour chart the price is now well below the a bearish 100 SMA that keeps falling below the 200 SMA while the Momentum indicator turned lower above the 100 level, whilst the RSI indicator barely corrected oversold readings, but remains well below its mid-line. In the 4 hours chart, the technical indicators have recovered partially from oversold levels, but are far from suggesting further advances, whilst the price is far below its moving averages, all of which supports some further declines to fresh lows, on a break below 106.60, the immediate support."

"Support levels: 106.60 106.10 105.55
Resistance levels: 107.50 107.90 108.40"