USD/JPY nears 111.00, chart driven recovery gathers steam

• USD/JPY rises to 110.98 seemingly due to chart factors.
• Treasury yields remain depressed.
• Asian stocks shrug off losses.

The USD/JPY caught a bid wave around 110.50 in early Asia and rose above 110.84 (Nov. 27 low) to set a session high of 110.98.

The Reuters report blames heavy demand out of Tokyo for the rise in the USD/JPY pair. While it may be true, the short-term oversold conditions seem to have played a role in strengthening the bid tone around the US dollar. The sharp recovery from yesterday's low of 110.33 could be the result of a bullish price-RSI divergence seen on the 1-hour and 4-hour chart.

Also, Asian share markets shrugged off early losses, thus allowing the technical recovery to gather pace. MSCI's broadest index of Asia-Pacific shares outside Japan is up 0.4 percent.

Ahead in the day, the spot could be influenced by Fed's Beige Book release and the action in the Treasury yields.

USD/JPY Technical Levels

A break above resistance of 11.18 (Monday high) would put an end to 5 days low lower highs pattern and would open doors for 111.65 (Oct. 16 low) and 111.86 (50% Fib R of the recent drop). On the downside, breach of support at 110.84 (Nov. 27 low) could yield a pullback to 110.47 (session low) and 110.33 (previous day's low).