USD/JPY recovery gains momentum, fast approaching 114.00 handle

After an initial dip below 113.00 handle, the USD/JPY pair regained traction and has now jumped to fresh session peak during early European session.

Currently trading around 113.85-90 region, comments from Japanese PM Shinzō Abe, that he wishes BOJ would take appropriate and bold steps to reach 2% inflation target, fueled renewed speculation of further monetary easing by BOJ and helped the pair to erase Italian referendum-led risk-off slide to a three-day low. 

Moreover, the ongoing recovery momentum around the shared currency is clearly suggesting that the financial markets had priced-in a 'NO' vote for Italian Prime Minister Matteo Renzi's constitutional reforms proposal in a referendum on Sunday and is further contributing to drive flows away from the traditional safe-haven currency - the Japanese Yen. 

Traders will now focus on the US ISM non-manufacturing PMI for November, slated for release later during NA session and would be looked upon to grab some short-term trading opportunities. In the meantime, the broader market risk sentiment might continue to be a key driver for the pair during European trading session. 

Technical levels to watch

Momentum above 114.00 handle could get extended towards 114.40-45 resistance above which the pair is likely to head towards testing last week's multi-month high resistance near 114.80-85 region. On the downside, 113.30 level now becomes immediate support, which if broken is likely to drag the pair back towards testing the lower end of daily trading range support near 112.90-85 region.