USD/JPY remains capped below 109.00 handle ahead of US data

   •  A goodish pickup in the US bond yields helps to bounce off lows.
   • Sliding USD/cautious mood now seemed to cap the up-move.
   •  Traders eye second-tier US economic data for some impetus.

The USD/JPY pair managed to recover around 40-45 pips from session lows, albeit struggled to build on the momentum further beyond the 109.00 handle. 

With investors looking past yesterday's softer US macro data, renewed pickup in the US Treasury bond yields was seen as one of the key factors behind the pair's goodish rebound from Asian session low level of 108.54.

Further gains, however, remained capped amid the prevalent negative tone surrounding the US Dollar. The coupled with weakness across European equity markets underpinned the Japanese Yen's safe-haven appeal and further collaborated towards keeping a lid on any strong up-move.

It would now be interesting to see if the pair is able to make it through the 109.00 handle or continues with its near-term corrective slide that began last week from levels closer to mid-111.00s.

Traders now look forward to the second-tier US economic releases - personal income/spending data, core PCE price index, the usual initial weekly jobless claims and Chicago PMI, in order to grab some short-term opportunities.

Technical levels to watch

On a sustained move above the 109.00 handle, a bout of short-covering could lift the pair back towards 109.80-85 supply zone (weekly tops) with some intermediate resistance near the 109.40 level.

Alternatively, weakness back below mid-108.00s could turn the pair vulnerable to head back towards challenging the 108.00 handle before eventually dropping to its next support near the 107.80-70 region.