USD/JPY trims a part of early recovery gains, trades below mid-110.00s

• USD/JPY gains some traction on Wednesday and built on the overnight modest rebound.
• A modest recovery in the risk sentiment, rebounding US bond yields remained supportive.
• The upside remains capped amid concerns over the economic impact from the coronavirus.

The USD/JPY pair trimmed a part of its early gains and has now retreated around 20 pips from the Asian session swing highs – levels just above mid-110.00s.

The pair built on the previous session's late rebound from sub-110.00 levels and gained some positive traction on Wednesday amid signs of stability in the global financial markets, which tends to undermine the Japanese yen's safe-haven demand.

Bulls refrain from placing aggressive bets

A modest recovery in the global risk sentiment allowed the US Treasury bond yields to stage a goodish bounce from all-time lows. This eventually extended some support to the US dollar and remained supportive of the early uptick.

However, growing market over the global outbreak of the deadly coronavirus and its impact on the world economy held investors from placing aggressive bullish bets, which seemed to be one of the key factors capping the upside.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the recent sharp corrective slide from multi-month tops has already ended and positioning for any further near-term appreciating move.

There isn't any major market-moving economic data due for release on Wednesday. Hence, any fresh developments around the coronavirus saga will continue to play a key role in producing some meaningful trading opportunities.

Technical levels to watch