Following a slump to its lowest level in more than a month at 110.66, the USD/JPY pair reversed course when American traders hit their desks and retraced a big portion of its losses. As of writing, the pair is trading at 110.93, still losing 0.15% on the day.

This latest upsurge witnessed in the early NA session hadn't been triggered by a fundamental development nor a data, suggesting that it's merely a technical move. After starting the week at 93.65, the US Dollar Index is making another attempt to recover towards the 94 handle, further helping the pair correct its losses. As of writing, the index is at 93.85, up 0.07% on the day.

On the other hand, major equity indexes started the day lower after Asian and European indexes stayed under pressure throughout the day, showing that investors are staying away from riskier assets, which could make it difficult for the pair to sustain its bullish momentum. In the meantime, the yields on the U.S. Treasury bond yields, which have been showing a strong positive correlation with the pair, are up early in the day with the 10-year reference gaining 0.7%, for now supporting the lift.

• Short USD/JPY for target of 108 – Deutsche Bank

Technical outlook

The RSI on the daily graph is at 35, suggesting that the pair has a little more on the downside before it becomes technically oversold. 110.60 (daily low) could be seen as the first technical support for the pair followed by 110 (psychological level) and 109.10 (Jun. 7 low). On the upside, the initial hurdle could be encountered at 111.40 (100-DMA) before 112.00 (psychological level) and 112.65 (20-DMA).

• USD/JPY shifted to bearish from neutral - UOB