USD/JPY retreats from near 2-week tops, still comfortable above 108.00 handle

• The safe-haven JPY continues to be weighed down by the US-China trade truce.
• A goodish pickup in the US bond yields underpin USD and remained supportive.
• Investors now shift their focus to this week’s important US macro releases.

The USD/JPY pair quickly retreated around 30-pips from near two-week tops, albeit has managed to hold its neck comfortably above the 108.00 handle.

The pair built on last week's goodish recovery move from multi-month lows and opened with a bullish gap at the start of a new trading week amid fading safe-haven demand. A trade war truce between the US and China triggered a fresh wave of global risk-on trade, which eventually dampened demand for traditional safe-haven currencies, such as the Japanese Yen. 

The latest positive development forced investors to scale back their expectations for a 50bps Fed rate cut move in July. The same was evident from a goodish pickup in the US Treasury bond yields, which underpinned demand for the US Dollar and provided an additional boost to the major.

Despite supporting factors, bullish traders lacked any strong conviction amid persistent worries about slowing global growth - reinforced by Monday's disappointing release of Chinese and Euro-zone manufacturing PMI prints for the month of June, though the pullback now seems more likely to remain limited ahead of this's week's important US macro data.

A busy week of US economic releases kicks off with the release of ISM manufacturing PMI, which might provide some short-term trading impetus later during the early North-American session. The key focus, however, will be on Friday's closely watched US monthly jobs report -popularly known as NFP, which might help determine the pair's next leg of a directional move.

Technical levels to watch