USD/JPY sticks to modest recovery gains, around 111.70

   •  USD recovers China report-led steep declines.
   •  Fading safe-haven demand lends further support.
   •  Up-move seemed lacking strong conviction. 

The USD/JPY pair stalled its modest recovery move ahead of the 112.00 handle and retreated few pips from session tops, albeit has managed to hold with some gains for the day. 

The US Dollar recovered the majority of its previous session's steep declines led by a report that China is considering slowing or halting its purchases of the US Treasuries and assisted the pair to gain some positive traction on Thursday.

This coupled with clarification by a Chinese government, that media reports could be based on wrong information, coupled with fading safe-haven demand provided an additional boost to pair's attempted recovery. 

The up-move, however, seemed lacking conviction and the price action now seems to suggest that the early rebound was solely led by some short-covering, especially after the recent slump to over 200-pips over the past three trading sessions. Hence, it would prudent to wait for a strong follow-through buying interest before positioning for any additional near-term recovery for the pair.

Later during the NA session, the US PPI print and the usual weekly jobless claims would now be looked upon for some fresh trading impetus. The key focus, however, would be on Friday's important macro releases - the latest consumer inflation figures and monthly retail sales data, which might determine the pair's next leg of directional move. 

Technical levels to watch

Recovery momentum beyond the 112.00 handle is likely to get extended towards 112.25-30 supply zone, above which the pair could be headed back towards the 112.75-80 hurdle en-route the 113.00 handle.

On the flip side, the 111.45-40 region is likely to protect the immediate downside, which if broken could accelerate the slide towards the 111.00 handle ahead of Nov. lows support at 110.84.