USD/JPY surrenders tepid recovery gains, back closer to 1-1/2 month lows

The USD/JPY pair surrendered all of its tepid recovery gains to session high level of 109.63 and has now retreated back closer to 1-1/2 month lows touched yesterday.

A modest pick-up in the US treasury bond yields helped the key US Dollar Index to bounce off 7-month lows. However, nervousness ahead of the UK general election and former FBI Director James Comey's testimony on Thursday continued underpinning the Japanese Yen's safe-haven demand and failed to assist the pair to build on early recovery move. 

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Adding to this, a weaker opening in the European bourses further drove investors towards traditional safe-haven assets and dragged the pair to fresh session lows near 109.30-25 region. 

In absence of any fundamental drivers, in-terms of any major market moving economic releases, broader market risk sentiment would continue to be a key determinant of the pair's movement through Wednesday's trading session. 

Technical levels to watch

From current levels, the pair is likely to find immediate support near the 109.00 handle, below which the downward trajectory could get extended towards its next major support near 108.45-40 region with some intermediate support around 108.80 level.

On the upside, any recovery attempts might continue to face some fresh supply near 109.50-60 region, which if cleared might trigger a short-covering bounce back towards the key 110.00 psychological mark en-route 110.25-35 strong horizontal barrier.