USD/JPY off session low but struggling to extend recovery momentum

Having posted a session low at 103.93, the USD/JPY pair managed to recover but is struggling to build on to the recovery momentum and remained stuck in neutral territory. 

Currently trading around 104.15-20 band, the pair initially tipped lower amid weakness in Asian equity markets. Meanwhile, a recovery in Asian equities, with Japan's Nikkei 225 now trading with gains of around 0.3%, drove investors back away from perceived safe-haven appeal of the Japanese Yen.

Adding to this, downward revision of Japan's industrial production data for the month of August is further helping the pair to hold on to rebound gains. The pair's bid tone could also be attributed to market expectation that the Fed is moving closer to raise interest rates further before the end of this year and has been the primary reason for advancing US Dollar. 

Next in focus would be the release of Empire State Manufacturing Index, Capacity Utilization, industrial production data from the US, later during NA trading session. In the meantime, broader market risk sentiment would continue to be a key drive of the pair's momentum during European session.

Technical levels to watch

Immediate upside resistance is pegged near 104.40-45 area, which if cleared is likely to boost the pair through multi-week swing high resistance near 104.65 (Oct. 13 high) towards reclaiming 105.00 psychological mark.

On the downside, renewed weakness back below 104.00 handle is likely get extended towards 103.70-65 horizontal support before the pair eventually drops to test 100-day SMA strong support near 103.25 region.