USD/JPY stages a comeback in Asia, will it last ahead of US data?

The USD/JPY pair bounces-off a dip to fresh six-week lows struck at 110.31 at Tokyo-open, and now consolidates the Asian recovery above 110.50 levels as we head towards early Europe.

USD/JPY: 111 handle back on sight?

The spot erased losses and jumped back onto the bids amid a recovery in risk sentiment, especially after the Chinese services PMI came in much-stronger than expectations. Flight to safety decreased as fears over the London terror attack took a back seat, while investors gear up for a big week ahead, with the UK election eagerly awaited. London Bridge terror attack: safe havens and ongoing terrorism

Moreover, a corrective rally in the US dollar versus its major peers, after the recent NFP-led sell-off, also provided extra legs to the USD/JPY recovery. The greenback recovery in tandem with the US yields after Goldman Sachs shrugged-off a miss on the headline NFP data, saying that the numbers are ‘still very strong’. Goldman also added that it sees a 90% chance of June Fed rate hike.

Meanwhile, further recovery will remain dependent on the sentiment on the European open and on the upcoming US economic releases, with the ISM services PMI, factory orders and LMCI data due on the cards later in the NA session.

USD/JPY Technical levels                 

Valeria Bednarik, Chief Analyst at FXStreet noted: “In the 4 hours chart, the 100 SMA accelerated its decline far above the current level, now converging with the 200 SMA around 111.70, while technical indicators have lost their downward strength, but remain within negative territory, also maintaining the risk towards the downside. Support levels: 110.20 109.80 109.30 Resistance levels: 110.50 110.90 111.40.”