USD/JPY: 108.75 is a strong hurdle, uptick in JPY likely indicates the risk reset is on shaky grounds

• USD/JPY is on the retreat, having faced multiple rejections near 108.75 in the last 24 hours.
• Risk-reset is likely on shaky grounds. China stimulus pledge could be overshadowed by the global growth slowdown.

The USD/JPY pair is feeling the pull of gravity in Asia, having established 108.75 as stiff resistance over the last 24 hours.

The currency pair is currently trading 108.52 - down 0.12 percent on the day.

The uptick in the anti-risk Japanese yen is likely an indication that the overnight improvement in the risk sentiment could be transient.

The S&P 500 rallied 27 points or 1 percent yesterday on China's stimulus pledge. Bloomberg reported yesterday that China is planning"large-scale" tax cuts to shore up the sagging economy. Further, the PBOC assured markets of "enough support" while dismissing flood-like stimulus.

The optimism generated by stimulus talk, however, could be transient, as China's lead indicators are pointing to a pronounced slowdown in the economic activity. That argument would gain credence if the Chinese stocks trade in the red today.

Meanwhile, German economic growth has hit a five-year low - 2018 GDP was 1.5 percent;  the lowest since 2013.

The odds of a no-deal Brexit may have dropped sharply following the decisive vote in the UK parliament against the May's Brexit deal. The resulting political uncertainty, however, could keep the risk assets under pressure. Add to that, dovish Fed expectations and the path of least resistance for USD/JPY appears to be on the downside.

USD/JPY Technical Levels

FXStreet Analyst Valeria Bednarik writes, "the pair retains a neutral stance, hovering within Fibonacci levels and still below bearish 100 and 200 SMA  in its 4 hours chart. The Momentum indicator continues lacking directional strength around its 100 level, while the RSI indicator heads marginally higher around 55."

Support levels: 108.30 107.90 107.55       

Resistance levels: 108.65 109.05 109.30