USD/JPY gains further traction, reclaims 117.00 handle

The USD/JPY pair's recovery from the vicinity of 116.00 handle gained further traction during early European session and is now building to its momentum back above 117.00 mark.

Currently trading around 117.10 level, testing session peaks, the greenback, as measured by the overall US Dollar Index, staged a remarkable recovery, following an early slump to two-week lows, and has been the sole driver of the pair's sharp recovery in the past hour or so. 

Adding to this, a flat to positive opening in European equity markets failed to lend any support to the Japanese Yen's safe-haven appeal and further contributed to the pair's recovery momentum from two-week through, amid thin holiday trade.

Later during NA session, Chicago PMI print for December might provide some impetus for short-term traders, while broader market risk-sentiment and USD price-dynamics would continue to be key determinants for the pair's movement ahead of New Year's weekend. 

Technical levels to watch

A follow through buying interest is likely to lift the pair towards 117.25 resistance area (yesterday's high) above which a move towards 117.60 resistance seems imminent. On the downside, 116.55 level now becomes immediate support to defend and renewed weakness below this immediate support might now drag the pair below 116.00 handle support towards testing its next major support near 115.45-40 region.