USD/JPY: Supply caps minor-recovery near 111.80

The JPY bulls appear to have regained control over the last hours, capping every recovery attempt in USD/JPY just below 111.80.

The spot remains confined in a narrow range so far this session, consolidating the drop to four-month lows reached at 111.43 in the Asian opening trades. The major accelerated its declines as risk-off trades remained in full swing amid global equities sell-off, triggered by reducing investors’ confidence in the US President Trump’s policies and reforms plans.

Moreover, today’s upbeat Japanese trade balance data also added to the ongoing Yen strength, collaborating to the downside in USD/JPY. Japan reported the highest monthly trade surplus in nearly seven years.

Meanwhile, markets appear to ignore latest comments from the Fed official Kaplan, citing 3 US rate hikes this year as a 'reasonable' baseline case.

Focus now remains on the European open to gauge the risk trend, which will have a major impact on the pair, as the economic calendar remains fairly quiet, except for the US housing data due later in the NA session.

USD/JPY Technical levels to watch             

Omkar Godbole, Analyst at FXStreet noted, “A technical recovery could be seen today… The immediate resistance at 112.00 could be breached, however, gains above 112.60 (Jan 17 low) appear unlikely. Remember the daily RSI is still sloping downwards and is yet to hit the oversold territory. Only a daily close below 111.60 would open doors for a continuation of the sell-off towards 110.00 levels.”