USD/JPY briefly spikes beyond 107.00 mark, lacks follow-through

• An intraday turnaround in the risk-sentiment prompts some aggressive short-covering.
• Recovering US bond yields underpinned the USD and remained supportive of the move.
• Fears of a full-blown US-China trade war might continue to keep a lid on any runaway rally.

The USD/JPY pair built on its goodish intraday bounce from fresh multi-month lows and briefly spiked to levels beyond the 107.00 handle in the last hour, albeit quickly retreated few pips thereafter.
 
The pair quickly reversed an Asian session dip to mid-105.00s - the lowest level since early-January flash crash, and rallied over 150-pips intraday on the back of some aggressive short-covering move amid fading safe-haven demand.
 
A dramatic intraday turnaround in the global risk sentiment weighed on the Japanese Yen's safe-haven status and turned out to be one of the key factors behind a sudden pickup, helping the pair to snap three consecutive days of losing streak.
 
Improving risk sentiment was evident from a modest rebound in the US Treasury bond yields, which extended some support to the US Dollar and further collaborated to the pair's strong intraday recovery back above the 107.00 round figure mark.
 
It, however, remains to be seen if the up-move is backed by any genuine buying or turns out to be a dead-cat bounce from extremely oversold conditions, which runs the risk of fizzling out rather quickly amid renewed US-China trade war fears.
 
Hence, it will be prudent to wait for a strong follow-through up-move before confirming that the pair might have actually bottomed out in the near-term and positioning for any further recovery ahead of speeches by influential FOMC members.

Technical levels to watch