USD/JPY turns negative, Shanghai Composite drops 0.8 percent

• The yen is on the rise, possibly due to weakness in the Chinese stocks.
• The bullish breakout remains elusive.

The Japanese Yen seems to have caught a bid wave, tracking the decline in the Shanghai Composite index.

The Chinese index has opened on a negative note, now trading 0.9 percent lower on the day. Consequently, the USD/JPY pair is losing altitude. As of writing, the spot is down 0.20 percent at 107.20, having clocked a session high of 107.61.

The retreat from 107.61 to 107.28 marks failure to hold above 107.49 - key resistance level. A clear break above the key hurdle would confirm the much-awaited bullish breakout and shall open the doors to 108.00 - 108.28 (Jan. 26 low).

The pair risks falling further if the S&P 500 futures (up 0.4 percent) turn negative and the US March retail sales print below estimates.

USD/JPY Technical Levels

A below 107.02 (10-day MA) would allow a drop to 106.75 (50-day MA) and 1006.62 (April 10 low). On the higher side, a daily close above 107.49 (April 5 high) could yield a sustained rally to 108.00 (psychological level) and 108.28 (Jan. 26 low).