USD/JPY - Upside capped by drop in S&P 500 futures

• Asian desks reluctant to push JPY lower amid losses in S&P 500.
• Also, the 10-year treasury yield trades dead flat at 2.8 percent. 

The S&P 500 futures are down 0.40 percent, suggesting the recovery from an 11-week low of $2593.07 could be nothing more than a 'dead cat bounce'. 

Hence, the USD/JPY pair, despite being mildly bid at 109.36, is still trading well below the previous day's high of 109.71. Also, Japan's Nikkei index is down at least 250 points from the session high of 21,901. Thus, traders are reluctant to push JPY pairs higher. 

Further. the 10-year treasury yield is flatlined at 2.8 percent. Hence, the USD is finding it hard to extend the recovery from the session low of 109.12. Looking ahead - the spot remains at the mercy of the sentiment in the equity markets. 

USD/JPY Technical Levels

A break above 109.71 (previous day's high) would open doors for 110.00 (psychological hurdle) and 110.48 (Feb. 2 high). On the downside, breach of support at 109.12 (session low) could yield a pullback to 108.92 (previous day's low) and 108.46 (Feb. 6 low).