USD/JPY retreats back below mid-112.00, US ISM PMI ahead

   •  Global risk aversion trade boosts JPY’s safe-haven appeal. 
   •  Slumping US bond yields adding to the downward pressure.
   •  Remains on track for its first weekly advance in the previous four.

The USD/JPY pair retreated from 1-1/2 week tops and touched an intraday low level of 112.28 in the past hour, albeit has managed to rebound few pips thereafter. 

A fresh wave of global risk-aversion trade, as depicted by steep losses across European equity markets and further reinforced by a sharp slide in the US Treasury bond yields, was seen boosting the Japanese Yen's safe-haven appeal.

Moreover, bulls also seemed inclined to take some profits off the table, especially after the pair's recent upsurge of nearly 200-pips from 2-month lows touched at the beginning of this week. 

Meanwhile, the market seems to have largely ignored a modest pickup US Dollar demand, despite the US tax bill chaos, with the global flight to safety turning out to be the only factor weighing on the major. 

The pair, however, has managed to hold its neck above the 112.00 handle and remain on track to post its first weekly advance in the previous four.

Traders now look forward to the release of US ISM manufacturing PMI, which along with speeches by influential FOMC members might provide some short-term trading opportunities on the last trading day of the week.

Technical level to watch

Immediate support is now pegged near the 112.15-10 area, below which the pair is likely to break through the 112.00 handle and head back towards retesting 200-day SMA support near the 111.70 region. 

On the upside, momentum back above 112.55-60 zone now seems to pave the way for an extension of the pair's recovery move even beyond the 113.00 handle towards its next major hurdle near the 113.40 level.