USD/JPY retreats from weekly tops, but holds above 111.00 handle

   •  Stalls overnight strong recovery move. 
   •  Downside seems limited for the time being.
   •  US data eyed for fresh trading impetus. 

The USD/JPY pair met with some fresh supply near mid-111.00s and touched session low in the last hour, albeit quickly recovered few pips thereafter. 

The pair stalled its overnight strong recovery move from the 110.00 neighborhood, or 4-month lows, and was now being weighed down by some renewed US Dollar weakness. The greenback pared some of its gains, supported by upbeat manufacturing data and the Fed's Beige Book, and has been one of the key factors behind the pair's modest pull-back from weekly tops. 

The downslide, however, seems cushioned amid the prevalent risk-on environment, which tends to weigh on the Japanese Yen's safe-haven appeal and helped the pair to bounce back to 111.30 level.

Adding to this, growing market conviction that the Fed will raise interest rates in March, reaffirmed by the ongoing upsurge in the US Treasury bond yields, might also contribute towards limiting any immediate downside, at least for the time being. 

Traders now look forward to the US economic docket, featuring the release of housing market data, Philly Fed Manufacturing Index and the usual weekly initial jobless claims, for some fresh trading impetus. 

Technical levels to watch

The 111.00 handle now seems to protect the immediate downside, which if broken could accelerate the slide back towards the 111.50-40 strong horizontal support. On the upside, momentum beyond mid-111.00s is likely to confront hurdle at the very important 200-day SMA, near the 111.70 region, above which the pair is likely to dart towards reclaiming the 112.00 handle.