USD/JPY reclaims 106.00 level after US retail sales data

After an initial bounce off session low of 105.60, the USD/JPY pair extended its tepid recovery and moved back to 106.00 handle after the release of US monthly retail sales data.

According to the data released just a while ago, US retail sales for the month of May recorded a better-than-expected growth of 0.5%, while core retail sales posted 0.4% growth. Although the growth rate was well short of that recorded in the previous month but was mostly in-line with consensus estimates. 

Earlier during the day, the pair extended its decline for third consecutive day and dropped to a 6-week low, just shy of a multi-month low level of 105.55 touched on May 5 as concerns over the likelihood of a 'Brexit' continued to boost the safe-haven appeal of the Japanese currency.

Investors now turn their focus to the key monetary policy decisions from US and Japanese central bank on Wednesday and Thursday, respectively, that would now assist traders to determine the near-term direction for the pair.

Technical levels to watch

From current levels, 105.55 (May 3 low) remains immediate support to watch for. This closely followed by support near 105.20 (Oct. 15, 2014 low), below which the pair might now turn vulnerable to extend its weakening trend towards its next major support near 103.00 round figure mark. 

On the flip side, momentum above 106.00 handle now seems to confront immediate resistance around 106.75-80 zone, which if cleared seems to assist the pair to extend the recovery momentum beyond 107.00 handle, towards its next major resistance near 107.55-60 area.