The USD/JPY pair once again failed to extend its recovery move beyond mid-111.00s and has now reversed daily gains to currently trade near the 111.00 handle.
A fresh wave of greenback selling pressure emerged during mid-European session, with the key US Dollar Index reversing course and dropping back closer to multi-week lows near mid-99.00s and has failed to extend any additional support to the pair’s recovery move.
This coupled with a mildly cautious sentiment prevalent in the European equity markets was further supporting the Japanese Yen’s safe-haven appeal and also collaborated to the pair’s retracement from session peak.
However, a positive tone surrounding the US treasury bond yields seems to have limited the downslide, at least for the time being.
Next in focus would the US economic docket, featuring the release of durable goods orders and would be looked upon for some fresh impetus during early NA session. With the so-called "Trump-reflation trade" fading, investors would remain focused on a key vote on the new healthcare legislation later on Friday in order to determine the buck's next leg of directional move.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes, "the spot is trading below the critical support of 111.60. Today’s close, if below 111.60, would signal a major bearish breakout and open doors for a sell-off in 110.00 in the short-term and 107.70 levels in the medium-term."
"Bears look more than ready to flex their muscles. The weekly DMI has confirmed bearish crossover.
The ADX line is ready to blast higher as well, pointing to a strong trend ahead. Note that it has been sloping downwards since December… which suggests the retreat from 118.66 was largely seen as corrective in nature." he added.
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