USD/JPY attempts a tepid recovery to 104.50 ahead of US PMI release

Despite of Friday's sharp drop, the USD/JPY pair managed to hold 102.00 handle and is attempting a tepid recovery on Monday to currently trade around 102.50 region.

Friday's BOJ monetary policy decision to hold interest rates and monetary base unchanged disappointed market participants hoping that the central bank would push rates further into negative territory to -0.3%. Adding to this, US GDP print for the second-quarter of 2016 failed to impress and exerted further selling pressure on the greenback.

On Monday, however, the US Dollar witnessed some rebound from lower levels, primarily led by some profit taking, ahead of the US ISM manufacturing PMI release, which is expected to match June reading and come-in at 53.2. A disappointing reading would further diminish prospects of an imminent Fed rate hike and continue weighing on the USD/JPY major. However, a stronger than expected print might trigger a near-term short-covering bounce.

Technical levels to watch

On the immediate upside, bulls could be aiming to conquer 102.70 resistance, above which the recovery could get extended initially towards 103.50 intermediate resistance ahead of a major resistance near 104.50-60 area. Alternatively, weakness below 102.00 handle now seems to turn the pair vulnerable to continue sliding further towards 101.50-35 support before heading towards support near 100.60-50 zone.