USD/JPY pares early losses, continues to find some support near 100-day SMA
• Friday's NFP report dampens Fed rate hike prospects and keeps the USD on the back-foot.
• US-China tensions weigh on market sentiment and underpinning JPY’s safe-haven demand.
The USD/JPY pair started the week on the defensive but once again managed to find some support near 100-day SMA support and has now recovered around 20-pips from session lows.
The pair extended its post-NFP retracement slide from the 113.00 neighborhood and a combination of negative factors kept exerting some downward pressure through the Asian session on Monday.
The latest US monthly jobs report, showing an addition of only 155K new jobs in November, fueled speculation over a possible pause in the Fed rate hike cycle in 2019 and was seen weighing on the US Dollar.
The pair was further pressured by a fresh wave of global risk-aversion trade, as depicted by a weaker tone surrounding equity markets and which tends to underpin the Japanese Yen's safe-haven demand.
Rising US-China tensions, following the arrest of a top Chinese executive in Canada at the request of the US, turned out to be one of the key factors denting investors' appetite for riskier assets.
In absence of any major market moving economic releases, broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum on the first trading day of a new week.
Technical levels to watch
The 112.25 region (100-DMA) remains an immediate strong support to defend and is closely followed by the 112.00 handle, below which the pair is likely to accelerate the slide towards 111.75-70 horizontal support.
On the flip side, the 111.65-70 region now becomes immediate resistance, which if cleared might trigger a short-covering bounce and assist the pair to make a fresh attempt towards reclaiming the 113.00 handle.