USD/JPY bounces off low, still weaker below mid-110.00s after US trade data

The USD/JPY pair finally broke out of European session consolidation phase and refreshed session low near 110.25 region during early NA session.

The pair, however, managed to bounce off few pips and is currently trading around 110.40 region following the release of US trade balance data. Spot witnessed some short-covering after data showed a larger than expected drop in US trade deficit. In fact, the US trade deficit fell to $43.6 billion in February, down from previous month's $48.5 billion and better-than consensus estimates indicating a drop to $44.8 billion.

Against the backdrop of prevalent risk-off mood, further reaffirmed by persistent slide in the US treasury bond yields, which tends to benefit the Japanese Yen’s safe-haven appeal, today’s upbeat US trade balance data did little to help the US Dollar to extend the up-move, albeit helped the pair to stall its slide just above the four month lows touched last week.

With broader market sentiment being an exclusive driver of the pair's downslide on Tuesday, for the third consecutive session, traders now look forward to the release of factory orders data for some immediate respite to the US Dollar bulls.

Technical levels to watch

Bears would be eyeing for a decisive break through the 110.00 handle, below which the pair is likely to accelerate the slide towards 109.20 support area with some intermediate support near 109.75-70 zone.

On the upside, 110.60 level now seems to have emerged as immediate resistance, which if cleared could lift the pair beyond the 111.00 handle back towards 111.30 hurdle.