USD/JPY trims early losses as S&P 500 futures inch higher

• USD/JPY eyes action in stocks.
• Pair defended long-term trendline support on Friday.

As of writing, USD/JPY is trading at 108.72, having clocked a low of 108.56 earlier today.

The slight recovery could be associated with the 0.60 percent rise seen in the S&P 500 futures. Also, Asian equities are trading in the green. For instance, Chinese stocks are up 0.80 percent, while the Hang Seng is up 0.58 percent. Also, India's Nifty index has strengthened 0.7 percent.

Clearly, risk sentiment seems to have stabilized somewhat, thus anti-risk Yen is surrendering gains. That said, a big jump is unlikely as risk aversion may worsen if the US CPI (due this Wednesday) beats estimates.

USD/JPY Technical Levels

The spot defended the ascending trendline (drawn from 2011 low and Aug. 2016 low) on Friday. Further, it created a doji candle on Friday.

A close above 109.31 (Friday's doji candle high) would confirm a bull doji reversal and open doors for a sustained move higher to 110.00 (zero levels)and 110.48 (Feb. 2 high).

On the other hand, a break below 108.56 (session low) could yield a drop to 108.00 (ascending trendline support). A violation there would shift attention to 107.32 (September low).