FXStreet (Mumbai) - USD/JPY reverses a knee-jerk downward spike to 118 handle and looks to stabilize above the hourly 50-SMA support placed at 118.18 on persisting risk-on environment. USD/JPY keeps gains above 118 Currently, the USD/JPY pair trades 0.48% higher at 118.25, unable to extend beyond 118.30 levels. The major bounced-off 118 barrier and now struggles hard to regain lost momentum, despite stabilizing Chinese stocks and oil price rebound. The Chinese benchmark, the Shanghai Composite (SSEC) index erased losses and trades +1.69% while the Shenzhen’s CSI300 index also gains +1.84% after a brief dip. The bulls now look for a strong catalyst in the form of the US NFP report to provide the much-needed impetus to the USD/JPY pair. Meanwhile, markets remain on the back foot and refrain from taking big positions in wake of the ongoing uncertainty and unrest surrounding Chinese economic developments. USD/JPY Technical levels to watch In terms of technicals, the immediate resistance is located at 118.58/60 (daily high/ 5-DMA). A break above the last, the major could test 118.76 (1h 100-SMA). While to the downside, the immediate support is located at 117.78/77 (1h 20 & 10-SMA) below which 117/ 116.95 (psychological levels/ daily S1) would be tested. For more information, read our latest forex news.