USD/JPY struggling to regain traction, stuck in a range below 111.00 handle

The USD/JPY pair struggled to build on overnight tepid recovery move from four month lows and has now turned neutral to currently trade around 110.65-70 level.

The pair consolidated previous session's slump to the lowest level since Nov. 22 as market participants now seemed to have turned skeptic over the Trump administration's ability to deliver on tax reforms and infrastructure spending. 

Meanwhile, a slight improvement in investors' risk-appetite, as depicted by a positive trading sentiment in Asian equity markets, was seen denting the Japanese Yen's safe-haven demand and provided some immediate respite of the bulls. 

However, the setback of a key healthcare reform bill continued to weigh on the US Dollar and collaborated towards capping any further recovery for the major. This coupled with a cautious comment from Dallas Fed President Kaplan, earlier during the day, could also be attributed to the pair's inability to register any meaningful recovery.

Later during the day, the US economic docket - goods trade balance and Conference Board's Consumer Confidence index, followed by Fedspeaks, would now be looked upon for fresh impetus. In the meantime, broader market risk-sentiment would continue to derive demand for safe-haven assets and provide some momentum for short-term traders.

Technical levels to watch

Momentum above session peak resistance near 110.80 level could get extended towards the 111.00 handle, above which a fresh bout of short-covering has the potential to lift the pair 111.30-35 resistance area ahead of 111.60-65 strong hurdle.

On the downside, renewed weakness below mid-110.00s would turn the pair vulnerable to head back towards multi-month lows support near 110.10 support before eventually dropping to 109.70 support.