USD/JPY struggling to extend recovery gains

The USD/JPY pair trimmed some of its recovery bounce to 100.87 but has held on to tepid gains and is currently trading around 100.65 region.

Having found some support at 100.00 psychological mark, the pair staged a recovery and got an additional boost from comments by Japanese officials to intervene, if needed, in order to curtail speculative moves and sharp appreciation of the Japanese Yen. The recovery momentum, however, lacked conviction as market seemed convinced that the Fed is unlikely to raise rates until December. 

On economic data front, the release of weekly jobless claims, which fell to a 2-month low, failed to attract any fresh buying interest around the greenback and assist the pair to build on to its recovery momentum. 

Up next would be the release of existing home sales, which would be looked upon to gauge the health of housing market and might provide some fresh impetus for the pair.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "From a technical point of view, and in the short term, the risk remains towards the downside, as in the 1 hour chart, the price remains far below it moving averages that are slowly grinding lower, while the technical indicators have turned south, with the RSI already below its mid-line. In the 4 hours chart, the Momentum indicator has turned modestly higher within negative territory, but the RSI resumed its decline around 38, supporting a retest of the critical 100.00 level."

"Support levels: 100.35 100.00 99.65
Resistance levels: 100.65 101.10 101.60"