USD/JPY defying global risk-on rally, turns back below 103.00 level

After hitting a five-day high level of 103.40, the USD/JPY pair reversed to erase all of its yesterday's recovery gains and is currently trading at session low level around 102.75-80 band. 

The pair has been defying risk-on trade across global equity markets and continues to struggle in building on to its three day's of tepid recovery gains. Traders seem to position themselves cautiously amid prevailing uncertainty surrounding the political and economic implication of last week's historic Brexit referendum.

Adding to this, disappointing Chinese manufacturing PMI contributed further towards investors cautious approach that is seen boosting the safe-haven appeal of the Japanese currency. 

PMI data will remain in focus on Friday as markets now await for the release of US ISM manufacturing PMI data, later during NY trading session.

Technical levels to watch

From current levels, sustained weakness below 102.70 is likely to get extended towards 102.20-102.00 support, which remains immediate strong support to watch for. Failure to hold 102.00 mark support now seems to drag the pair towards 101.50-40 support before sliding further below 101.00 handle towards testing the very important 100.00 psychological mark support. 

On the flip side, the pair needs to sustain its strength above 103.00 handle for increasing the prospects of any further near-term recovery. Bullish momentum above 103.00 level, and a subsequent strength above 103.50 resistance, has the potential to lift the pair beyond 104.00 handle, towards testing its next major resistance around 104.55-65 region.