USD/JPY sticks to tepid recovery gains above 109.00 handle

The USD/JPY pair gained some traction and traded with mild positive bias above the 109.00 handle amid holiday thinned trade on Friday. 

The pair edged higher and shrugged off escalating geopolitical tensions, which tends to underpin the perceived safe-haven appeal of the Japanese Yen. On Thursday, the US military dropped a massive 21,000-pound bomb on ISIS tunnels located in Northeast Afghanistan, but seems to have already been discounted in the prices. 

Traders also largely ignored the upbeat release of Japanese industrial production and capacity utilization data for February. In fact, Japanese industrial production recorded a growth of 3.2% m-o-m during Feb. (previous 2.0%), while capacity utilization stood at 3.2% for the same period (previous 0.1%), but did little to attract any fresh selling pressure around the major.

Despite of the up-move, the pair hangs around 5-month lows touched on Thursday and the ongoing tepid recovery seems to be solely driven by some short-covering from closer to the very important 200-day SMA support. 

Meanwhile, suppressed US treasury bond yields, with the benchmark 10-year yields hovering around multi-month lows, might also collaborate toward keeping a lid on the pair's recovery move. 

Investors now look forward to the US macro data for some fresh impetus. Today's US economic docket features the release of latest CPI print and monthly retails sales data, due later during the NA session.

Technical levels to watch

Immediate resistance is seen near 109.40 level (yesterday's high), above which the pair is likely to accelerate the recovery towards 109.85 intermediate resistance ahead of the key 110.00 psychological mark.

On the flip side, momentum back below the 109.00 handle might continue to find strong support near 108.70-60 region (200-day SMA), which if broken decisively now seems to pave way for continuation of the pair's downslide towards 108.00 round figure mark en-route 107.75-70 important horizontal support.