USD/JPY extends recovery further beyond the 111.00 handle

The post-FOMC greenback sell-off seems to have stalled, with the USD/JPY pair built on its recovery move back closer to mid-111.00s.

Currently trading just a few pips away from session tops, the pair has now recovered over 70-pips from sub-111.00 level touched during early Asian session on Thursday, in the aftermath of perceived dovish FOMC statement.

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With investor now looking past the Fed decision, a modest pickup in the US Treasury bond yields helped the key US Dollar Index to bounce off 13-month lows and has been one of the key factors supporting the pair's up-tick through the mid-European session.  

Traders even shrugged off a mildly negative trading sentiment around European equity markets, which tend to benefit the Japanese Yen's safe-haven appeal, with broad based greenback recovery acting as an exclusive driver of the pair's recovery from closer to one-month lows touched at the beginning of this week.

Focus now shifts to the US economic docket, featuring the release of durable goods orders, goods trade balance data and weekly jobless claims, which would now be looked upon for some fresh impetus during early NA session.

Technical levels to watch

On a sustained recovery beyond mid-111.00s, a fresh bout of short-covering could lift the pair back towards 50-day SMA hurdle near the 112.00 handle, above which the up-move could further get extended towards its next major hurdle near 112.35-40 area.

Meanwhile, on the downside, any retracement back below 111.15 level now seems to find support at the 111.00 handle, which if broken would turn the pair vulnerable to head back towards monthly lows support near 110.60 level en-route 110.35-30 support.