USD/JPY holds above mid-108.00s, lacks follow-through

The USD/JPY pair struggled to capitalize on its early uptick to multi-day tops and is currently placed in the neutral territory, just above mid-108.00s.

The pair gained some traction at the start of a new trading week and built on Friday's goodish bounce from one-week lows that came following the release of mostly upbeat US monthly retail sales data for May. The headline sales came in below consensus estimates but were largely offset by stronger-than-expected ex-autos and control group sales figures. 

This coupled with upward revisions of the previous month's readings reduced the already-low chance of an easing by the Fed at its upcoming meeting this week and prompted some US Dollar short-covering move. The pair remained supported by a follow-through uptick in the US Treasury bond yields on Monday, albeit the prevailing cautions mood capped gains.

Growing market concerns that a prolonged US-China trade war could drag the global economy into a recession continued denting investors' appetite for riskier currencies. This was evident from a mildly bearish trading sentiment around equity markets, which underpinned the Japanese Yen's safe-haven demand and might continue to keep a lid on the pair's attempted recovery.

Moving ahead, Monday's US economic docket - featuring the release of Empire State Manufacturing Index, will be looked upon for some short-term trading impetus later during the early North-American session. The key focus, however, will remain on Wednesday's FOMC monetary policy update, which might help determine the pair's next leg of a directional move.

Technical levels to watch