USD/JPY flirting with lows, below 110.00 handle ahead of US data

The greenback held weaker against its Japanese counterpart, with the USD/JPY pair hanging within striking distance of nearly two-month lows touched in the previous session.

The pair maintained its offered tone through the mid-European trading session on Thursday and largely ignored a goodish US Dollar recovery. The greenback remained supported by growing expectations that the Fed would stick to its plans for gradual monetary policy tightening, but has failed to provide any respite for the major. 

With investors keeping a close watch on the standoff between the US and N. Korea, a fresh wave of selling pressure in European equity markets was seen benefitting the Japanese Yen's safe-haven appeal and seems to be the only factor holding the pair below the key 110.00 psychological mark. 

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Next on tap would be the US economic docket, featuring the release of weekly jobless claims and PPI, while the major focus remains on Friday's CPI print, which would determine if the greenback recovery move is sustainable in the near-term.

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Technical levels to watch

Currently trading around 109.80 level, weakness below 109.55 level (yesterday's low) would turn the pair vulnerable to break below the 109.00 handle and retest June monthly lows support near the 108.80 region. 

On the flip side, sustained recovery above the 110.00 handle, leading to a subsequent move beyond 110.20-25 hurdle, is likely to trigger a short-covering bounce back towards 110.75 horizontal level ahead of the 111.00 round figure mark.