USD/JPY retraces daily losses toward mid-111s

After finding support at the 111 handle in the European session, the USD/JPY pair started to recover its daily losses and is now trading at 111,40, where it closed the previous day.

The US Dollar Index, which spent the majority of the day in a very tight range near its opening level of 97.20, gathered some momentum in the NA session as the U.S. Treasury-bond yields rebounded following a weak start to the day. At the moment, the DXY is at 97.30, up 0.07% on the day while the 10-year U.S. T-bond is gaining 0.06% at 2.156%.

Moreover, the fact that major equity indexes in the U.S. moved into the positive territory in the second half of the NA session suggests that the risk appetite is coming back to the markets, hurting the demand for safer assets like the JPY. 

Today's data from the U.S. couldn't provide a catalyst for the greenback and  FOMC member Jerome Powell didn't touch on the monetary policy or the current state of the economy in his speech on ‘Relationship Between Regulation And Economic Growth.' In the early trading hours of the Asian session, Nikkei Manufacturing PMI, which is expected to improve to 53.4 in June from 53.1 in May, will be looked upon for fresh impetus.

• US: Conference Board Leading Economic Index (LEI) increased 0.3% in May to 127
• Kansas Fed: Manufacturing activity expanded further with strong expectations for future activity

Technical outlook

Both the 50 and the 100-DMA on the daily graph are moving sideways near 111.60, forming a strong resistance. 112.15 (200-DMA) and 112.75 (May 17 high) could be targeted above that level. On the downside, supports align at 111.05/00 (daily low/psychological level), 110.55 (20-DMA) and 110 (psychological level).

• USD/JPY: Neutral view for another week - Westpac