USD/JPY rebounds in tandem with Nikkei, back above 107

The bid tone around the JPY pair weakened as we move towards early European trading, sending USD/JPY sharply higher beyond 107 handle.

USD/JPY regains 5-DMA at 107.05

The JPY bulls lost footing and gave up major part of the gains after the upbeat Chinese imports release cool down fears over China’s internal demand and therefore, led to a major turnaround as the risk conditions across the Asian markets. At the time of writing, USD/JPY trades -0.17% at 107.18, easing-off session highs posted at 107.28. While the Nikkei flipped to gains to now trade at 16,766, up +0.54% so far.

Moreover, with improving risk appetite, the US currency also pared losses, further contributing to the recovery in USD/JPY. However, the Japanese yen finds support from upbeat Japanese growth numbers, which showed that the economy expanded 0.5% q/q in Q1, coming in slightly better than the 0.4% reading seen previously. On yearly basis the economy grew 1.9% last quarter.

In the day ahead, the persisting risk conditions will have a considerable bearing on the major as the trading calendar remains relatively quiet, with the only US JOLTS jobs openings data.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 107.46/50 (daily pivot/ psychological levels). A break above the last, the major could test 108 (round number). While to the downside, the immediate support is seen at 106.72/71 (daily low & S2) and below that at 106.35 (Monthly Low).