USD/JPY recovers a major part of early slide to 2-week lows, still below 108.00 handle

• A modest pickup in the US bond yields/USD demand helped gain some traction.
• Recovering equity markets dent JPY’s safe-haven status and remained supportive.
• Further gains seemed limited amid the lack of progress in the US-China trade talks.

The USD/JPY pair managed to recover a major part of its early slide to over two-week lows, with bulls eyeing a move towards reclaiming the 108.00 round figure mark.

The pair managed to attract some dip-buying interest ahead of mid-107.00s, with a modest pickup in the US Dollar demand - primarily led by a sudden drop in the shared currency, further collaborating to the latest leg of an uptick over the past hour or so.

A Bloomberg report, citing the probability that the ECB could revamp its inflation target, suggested that the ECB was set to ease even more than the market had priced in and prompted some aggressive selling around the European currency. 

The news also boosted the global risk appetite - evident from a modest pickup in the US Treasury bond yields and an intraday recovery across European equity markets, which undermined the Japanese Yen's relative safe-haven demand and remained supportive of the uptick.

The Japanese Yen was further weighed down by the BoJ Governor Haruhiko Kuroda's comments, reiterating that the central bank will continue with powerful monetary easing persistently, though persistent worries over the US-China trade disputes kept a lid on any strong gains.

Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have actually bottomed out in the near-term and positioning for any further near-term appreciating move ahead of the highly anticipated FOMC meeting later this July.

Thursday's US economic docket - featuring the second-tier releases of Philly Fed manufacturing index and the usual initial weekly jobless claims, will now be looked upon for some short-term trading opportunities during the early North-American session.

Technical levels to watch