USD/JPY recoveries short lives, bears in control, eyeing 113 the figure

• USD/JPY has been capped in its recovery attempts at the 113.70 high as markets can't shake the worsening global macro picture following a series of offbeat data releases from Japan, China and the Eurozone. 
• USD/JPY bears capitalising on softer tone in the dollar and shifting rate assumptions that are damaging the foundations for a stronger and overcrowded long dollar position. 

USD/JPY has been failed at the upside attempts on the 114 handle and had been in decline reaching the 38.2% Fib retracement target at the 113.09 late European session lows. Profit taking and China/US trade talk news had started to lift risk appetite, sending the pair back to 113.70 but the bid from China to appease Washington is too little too late. There is too much conjecture surrounding the status quo and markets prefer to wait and see what might come of potential talks between Xi and Trump at the Buenos Aires G20 summit later on in the month.   

The Yen has been helped by some risk aversion flows from the pound this week and has regained its safe haven title due to broadly dire global economic and political conditions which are expected to weigh on US growth, subsequently impeding on the dollar's advance in an already crowded trade - The DXY has fallen a point over the last couple of days as a result. 

Data picks

As for data, US retail sales bounced back in October, growing 0.8%, after downward revisions showed modest declines in the prior two months and was the largest monthly increase since May.

Analysts at ING bank noted that Japan will likely report a trade deficit next week but don't think this will have any strong implications for the currency. "The country essentially operates a balance on trade these days and drifts in and out of deficit with little impact on the yen. Japanese CPI will rise a little further – in line with the earlier Tokyo release, but core inflation will remain anchored a little above zero. Nothing to excite the Bank of Japan here."

USD/JPY levels

• Support levels: 113.00 112.60 112.25   
• Resistance levels: 113.70 114.00 114.45

Technically, Valeria Bednarik, Chief Analyst FXStreet explained that the 4 hours chart shows that the pair tested a mild bullish 100 SMA before bouncing, now trading at daily highs:

"Technical indicators also recovered after nearing oversold readings, holding below their midlines but with an increased upward strength, indicating that the pair could continue recovering ground. The key will be stocks´ behavior as a mirror of the market's sentiment. Should equities continue recovering, the pair could regain the 114.00 level, although a turn to the worst in sentiment will likely see it back challenging the 113.00/10 support zone."