USD/JPY extends recovery from Friday's near 4-month lows

The USD/JPY pair was seen building on Friday's recovery move from sub-109.00 level and continued gaining some traction through early European session. 

A slight improvement in investors risk appetite, despite weaker Chinese macro data, was seen weighing on the Japanese Yen's safe-haven demand. This coupled with a goodish US Dollar recovery further collaborated to the pair's recovery move from last week's near 4-month low, touched in the aftermath of softer US inflation figures on Friday.

   •  US Dollar up smalls around 93.00

Meanwhile, the market seems to have largely ignored today's upbeat release of prelim Japanese Q2 GDP report, with a broad based USD recovery acting as an exclusive driver of the pair up-move at the start of a new trading week. 

It, however, remains to be seen if the pair is able to build on the up-move or runs through some fresh supply at higher levels amid rising tensions between the US and N. Korea, which might continue to act as a key overhang on the pair's near-term outlook. 

   •  USD/JPY: Dips below 110 well supported - Westpac

Apart from the geopolitical tensions, this week's important releases from the US - monthly retail sales and the FOMC meeting minutes, would also play a key role in determining the pair's next leg of directional move.

   •  US: Economy to take cues from macro data - BBH

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "It is a wait and watch game today. Confirmation of the bullish reversal would open doors for 111.00 handle, although falling risk reversal suggests the upticks are likely to be short lived. On the downside, support at 108.13 stands exposed."