USD/JPY off session low, attempting a fresh move towards 114.00 handle

The USD/JPY pair failed to build on Tuesday's strong recovery move and faced rejection at 114.00 handle. 

The pair subsequently dropped to 113.40 level after better-than-expected Japanese trade balance data, albeit has managed to bounce off lows and is currently trading around 113.70 region. Japanese data released on Wednesday showed better-than-expected trade surplus for the month of December, resulting to a yearly surplus in 2016 for the first time in six years. 

Upbeat trade balance data-led boost to the Japanese Yen turned out to be short-lived and the pair reversed some of its losses amid broad based mild US Dollar recovery move and prevalent risk-on mood, which tends to weigh on traditional safe-haven currencies, including Yen.

In absence of any major economic releases on Wednesday, the pair remains at the mercy of USD price dynamics and broader market risk sentiment ahead of this week’s important US macro releases that include – quarterly GBP growth numbers and durable goods orders, both scheduled for release on Friday. 

Technical levels to watch

On a sustained move back above 114.00 handle, the pair is likely to jump to 114.25-30 intermediate resistance before heading towards testing 50-day SMA hurdle near 114.60-65 region. On the flip side, weakness below session low support near 113.40 level might now drag the pair back below 113.00 handle towards an important horizontal support near 112.60 region.