USD/JPY struggling to extend the up-move further beyond 111.00 handle

After an early dip to session lows near 110.70 region, the USD/JPY pair caught some fresh bids to move back above the 111.00 handle but has struggled to gain any follow through traction. 

The Japanese Yen was being weighed down by today's disappointing Merchandise trade balance data, coming-in to show a surprise deficit of ¥-203.4 billion for May as compared to a surplus of ¥76.0 billion expected and last month's ¥481.1 billion (revised lower from ¥481.7 billion). 

GMT
Event
Vol.
Actual
Consensus
Previous
Sunday, Jun 18
23:50
17.8%
14.8%
15.2% Revised from 15.1%
23:50
¥-203.4B
¥76.0B
¥481.1B Revised from ¥481.7B
23:50
¥133.8B
 
¥157.6B Revised from ¥97.6B

Adding to this, the prevalent risk-on environment, as depicted by positive trading sentiment around Asian equity markets, further dented demand for traditional safe-haven assets, including the Japanese Yen, and collaborated to the pair's up-move at the start of a new trading week.

The pair, however, lacked a strong follow through momentum and oscillated within Friday's daily trading range amid subdued action around the US Treasury bond yields.

Investors now look forward to comments by influential FOMC officials, starting with the Chicago Fed President Charles Evans, for reinforcement of last week's hawkish Fed decision in order to determine the pair's next leg of directional move.

   •  Fed sent two strong messages - Nomura

Technical levels to watch

From current levels, immediate resistance is pegged near 111.35-40 region, above which a fresh bout of short-covering has the potential to lift the pair towards 111.80-85 horizontal resistance, en-route the 112.00 handle.

On the downside, 110.70-65 zone now seems to act as immediate support, which if broken is likely to accelerate the slide towards 110.35-30 intermediate support ahead of the key 110.00 psychological mark.

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