USD/JPY recovers from daily lows, but upside limited

• USD/JPY trims daily losses but lacks upside momentum
• Risk sentiment improves, helping the US dollar against the yen

The dollar bounced from daily lows and cut most of its daily losses against the yen, as the risk aversion mood eased over the last hours. 

A mildly negative sentiment dominated the markets during the European session, leaving JPY, EUR, CHF and gold as the best performers. However, risk aversion induced gains faded afterwards leaving most pairs back back at square one as investors gear up for tomorrow’s FOMC meeting. 

USD/JPY bottomed out at 108.41, but found support and managed to climb back to 108.93 where the 100-hour SMA offered resistance. At time of writing, the pair is trading at 108.82, still 0.12% below its opening price. 

USD/JPY levels to consider

In terms of technical levels, next resistances are seen at 109.19 (Jan 29 & 30 highs),  109.76 (Jan 26 high) and 109.93 (10-day SMA). On the other hand, supports could be found at 108.40 (intraday low), 108.27 (Jan 26 low) and 108.12 (Sep 11 low).