USD/JPY rebounds back closer to 105.00 handle

The USD/JPY pair has managed to fill weekly bearish opening gap and is now extending its recovery momentum to currently trade at a fresh session peak level around 104.90 region. 

The pair on Friday reversed after hitting three-month high of 105.53 on news of FBI probe on Clinton's email that boosted safe-haven appeal of the Japanese Yen, which extended through early Asian session on Monday. The pair, however, has managed to rebound and is move back closer to 105.00 handle on month-end demand from Japanese importers and disappointing Japanese economic data.

Data released on Monday showed Japanese industrial production remained flat during September while monthly retail sales contracted more than expected. Disappointing releases provided downside support was seen weighing on the Japanese currency and helped the pair to recover early losses. 

Focus now shifts to US economic docket, featuring the release of Fed's preferred inflation gauge, Core PCE Price Index and personal income / spending data, which will be followed by the release of Chicago PMI. Major focus, however, would be on BOJ monetary policy decision and important Chinese macro data during early Asian session on Tuesday, which would help investors to determine the next leg of directional move for the major.

Technical levels to watch

Momentum above 105.00 handle is likely to get extended towards 105.30 resistance area above which the pair seems to head towards 105.75-80 horizontal resistance before aiming to conquer 106.00 handle. On the downside, 104.40 level (near session low) now seems to protect immediate downside, which if broken is likely to accelerate the corrective slide and drag the pair back below 104.00 handle towards testing its next support near 103.80 level.