USD/JPY off lows, but struggling to gain traction despite of upbeat US data

The USD/JPY pair has managed to recover over 50-pips from fresh multi-week lows touched during early European session, albeit has struggled to gain some fresh traction despite of upbeat US economic data.

Currently trading around 110.70-80 band, bulls seemed impressed by today's US macro data that showed weekly jobless claims unexpectedly fell to the second lowest weekly reading in eight years. Adding to the positive labor market report, Philly Fed Manufacturing Index reflected continuous improving conditions and soared to a 10-month high level of 38.8 in May. 

Today's stronger-than-expected data helped the US treasury bond yields to reverse majority of its early losses, led by escalating US political concerns, but did little to provide any fresh bullish impetus to the major.

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Meanwhile, weaker sentiment around equity markets remained supportive for the Japanese Yen's safe-haven appeal and hence, the broader market risk-sentiment would continue to be an exclusive driver of the pair's movement through early NA session.

With the US economic data out of the way, focus now shifts to the US Treasury Secretary Steven Mnuchin's testimony on Rollback of Dodd-Frank Financial Regulations before the Senate Banking Committee, due in an hour from now.

Technical outlook

"In the 4 hours chart, the price remains well below its moving averages, with the 200 SMA around 111.20 capping the advance at the beginning of the day, and technical indicators barely bouncing within extreme oversold readings, all of which maintains the risk towards the downside. The 38.2% retracement of the November/December rally stands at 109.90, with a break below most likely  fueling the bearish momentum" writes Valeria Bednarik, Chief Analyst at FXStreet.