USD/JPY technical analysis: Not out of the woods yet, recovery falters near 20-DMA

• The USD/JPY pair built on this week's recovery move from multi-month lows and traded with a positive bias for the second consecutive session on Wednesday.
• The pair climbed to over one-week tops, albeit bulls struggled to extend the momentum beyond 21-day SMA resistance amid fading US-China trade optimism.

It is worth reporting that China's foreign ministry spokesman clarified that they were not aware of any report on a tentative trade truce between the two countries and provided a minor lift to the Japanese Yen's safe-haven status.

Looking at the technical picture, the pair remains well within a 2-1/2-month-old descending trend-channel formation and the recent recovery might still be categorized as a corrective bounce from extreme oversold conditions.

Hence, any subsequent up-move seems more likely to confront a stiff resistance near the top end of the mentioned trend-channel, currently near the 108. 45 region and only a sustained breakthrough will negate the bearish outlook.

Meanwhile, technical indicators on the daily chart have been recovering but are yet to catch up with the positive momentum and add credence to the bearish bias, though traders are likely to take fresh cues from the Trump-Xi meeting.

Immediate support awaits near the 107.30 horizontal zone, which if broken will reinforce the negative outlook and turn the pair vulnerable to accelerate the slide further towards challenging the trend-channel support, currently near the 106.25 region.

USD/JPY daily chart