USD/JPY clings to small daily gains above 111.70, eyes on US GDP data

The USD/JPY pair lost more than 50 pips on Thursday and slumped to its lowest level in two weeks at 111.36 before closing near mid-111s. With trading action turning ahead of the critical GDP data from the United States, the pair erased a small portion of yesterday's losses and was last seen trading at 111.77, adding 0.13% on a daily basis.

Earlier today, while testifying before parliament, Bank of Japan's Executive Director Eiji Maeda explained that the BoJ's ultra-easy monetary policy was aimed at achieving the 2% inflation target and they had no intention to influence the Japanese yen. Nevertheless, the JPY largely ignored these comments as it did the day before following the BoJ's monetary policy decisions.

Meanwhile, the 10-year US T-bond yield, which shows a strong correlation with the USD/JPY pair, is posting small losses today, making it hard for the pair to gather recovery momentum.

Later in the day, the U.S. Bureau of Economic Analysis will publish its first estimate of the real GDP growth for the first quarter of the year. The market expectation is for the GDP to expand by 2.1% on a yearly basis following the previous quarter's reading of 2.2%. A positive reading is likely to help the greenback gather strength against its rivals as it would revive speculations of the Fed moving away from its dovish stance and vice versa. Ahead of the data, the US Dollar Index is up 0.03% on the day at 98.17.

Technical levels to watch for

The pair could encounter the first resistance at 112 (psychological level) ahead of 112.40 (Dec. 20, 2018, high/Apr. 24 high) and 113.25 (Dec. 5 high). On the downside, supports are located at 111.50/40 (200-DMA/Apr. 25 low), 111.00 (Apr. 9 low), and 110.50 (100-DMA).