USD/JPY off lows, but struggles to build on momentum beyond 111.00 handle

   •  A goodish USD rebound helps to find support near 50-day SMA.
   •  Barkin's hawkish comments provide an additional boost.
   •  Improving risk appetite offset by trade-related developments.

The USD/JPY pair has managed to recover around 20-30 pips from over one-week lows, albeit seemed struggling to build on its momentum back above the 111.00 handle.

The pair found decent buying interest near 50-day SMA and was being supported by a goodish pickup in the US Dollar demand since the early European session. The uptick was further supported by Richmond Fed President Tom Barkin's hawkish comments, saying that the Fed should continue raising rates as the benchmark rate is not yet back to normal level.

Meanwhile, a slight improvement in investors' appetite for riskier assets, as depicted by a mildly positive tone around European equity markets, was largely offset by the latest US-China trade-related development. China's commerce ministry announced retaliatory tariffs of 25% on 333 US products, worth $16 billion, which drove some safe-haven flows and eventually capped any meaningful recovery attempt.

It would now be interesting to see if bulls continue to show resilience at lower levels or bears manage to drag the pair below 50-day SMA to confirm a fresh bearish breakdown amid absent market moving economic releases. 

Technical levels to watch

A follow-through weakness below the 110.85 region (50-day SMA) is likely to accelerate the slide towards 110.60 support area, which if broken might turn the pair vulnerable to extend the downfall back towards testing the key 110.00 psychological mark.

On the upside, a recovery attempt back above 111.20 level might continue to struggle near the 111.50 supply zone, above which a bout of short-covering could lift the pair back towards reclaiming the 112.00 handle and continue scaling higher in the near-term.