USD/JPY has already more than recovered losses from Monday's global risk-off jag and could retest last week's highs as U.S. assets remain attractive to investors.

Monday's risk-off dive to key Fibo and cloud base supports came as pandemic fears rebounded and forced yen-funded reflation trades into reverse. But Monday's drop in Treasury yields and stocks triggered the TINA effect: There Is No Alternative to stocks when risk-free government debt yields are near zero or negative.

And Treasuries, the safest asset, still offer much higher yields than JGBs and Bunds. The Fed is inching toward trimming QE purchases and perhaps rate hikes by late 2022, while there's no chance of BOJ rate hikes and ECB's tightening is doubtful.

Immediate USD/JPY resistance is from Friday's high, the 50% Fibo of July's 111.66-109.07 July slide and the daily Kijun at 110.34/365 on EBS.

A close above there opens the way for the 61.8% Fibo and last week's pre-plunge highs at 110.67/70. At the moment, the three-piece July drop looks like a completed ABC correction of the broader pandemic recovery uptrend. A close above the B-wave high at 110.70 would affirm that and put the 111.66 peak on the agenda. For more click on FXBUZ

(Randolph Donney is a Reuters market analyst. The views expressed are his own.) ((Randolph.donney@thomsonreuters.com))