USD/JPY bounces off multi-month lows, still weaker below 200-DMA

The greenback remained on back-foot across the board, dragging the USD/JPY pair to a fresh five-month low level near 108.15-10 band on Monday.

A duo of disappointing US economic reports released on Friday - monthly retail sales and the latest CPI print, now seems to have dampened market expectations of faster Fed rate-tightening cycle and is weighing on the US Dollar. 

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Moreover, rising geopolitical tensions, especially after North Korea's latest failed ballistic missile test, coupled with growing market anxiety ahead of the upcoming French Presidential election, remains supportive for the Japanese Yen's safe-haven appeal. 

A rush to traditional safe-haven assets is further reinforced by a continuous slide in the US treasury bond yields, which further collaborated to the offered tone surrounding the major.

The pair, however, has managed to bounce off few pips from multi-month lows and is currently trading around 108.30-35 region amid holiday-thinned trading conditions. Later during the NA session, the release of Empire State Manufacturing Index from the US would now be looked upon for some short-term trading opportunities, with broader market risk sentiment a key determinant of the pair's near-term trajectory.

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Technical levels to watch

Any recovery attempts might now confront resistance at 200-day SMA near 108.65 region, above which a bout of short-covering could lift the pair back towards the 109.00 handle ahead of 109.40 horizontal resistance.

On the downside, weakness below multi-month lows near 108.15-10 area is likely to find support at the 108.00 round figure mark, which if broken is likely to accelerate the slide towards 107.75-70 support area.