FXStreet (Mumbai) - The USD bulls jump back on the bid and lift the USD/JPY pair from multi-month troughs back above 118 barrier, as dust settles over the Chinese equities rout triggered by further yuan depreciation by the PBOC. USD/JPY bounces-off 117.70 levels Currently, the USD/JPY pair trades -0.25% lower at 118.20, struggling to regain lost ground. A sudden bout of risk-aversion seems to have cooled-off a bit as the Chinese stocks are off trading for the rest of the day and the traders are healing their wounds after the heavy sell-off seen in the opening hours of China’s markets, offering some respite to the USD bulls. Among other Asian indices, Japan’s Nikkei loses -1.63%, the S&P/ASX 200 tanks -2.07% and Hong Kong’s Hang Seng drops -2.53%. The ongoing recovery in USD/JPY appears weak and the yen bulls are likely to take back control as risk-off trades are expected to extend into the European session, with markets bearing the brunt of China economic troubles and falling oil prices. In absence of significant releases in the European session, the focus now remains on the weekly jobless claims from the US for further cues. While the broader market sentiment will continue to play a crucial role in the day ahead. USD/JPY Technical levels to watch In terms of technicals, the immediate resistance is located at 118.50 (confluence of hourly 5, 10, 20 MAs). A break above the last, the major could test 118.75 (daily high). While to the downside, the immediate support is located at 117.72/68 (daily S2 & low) below which 117.22 (daily S3/ Aug levels) would be tested. For more information, read our latest forex news.