USD/JPY off lows, still in the red below mid-110.00s

   •  Yesterday’s dismal US macro data prompted some aggressive long-unwinding trade.
   •  The data overshadowed US-China trade optimism and boosted JPY’s safe-haven demand.
   •  The USD managed to regain some positive traction and helped limit deeper losses.

The USD/JPY pair traded with a negative bias for the second straight session and was seen extending the overnight retracement slide from YTD tops.

Having once again failed to preserve/build on its momentum beyond the 111.00 handle, a modest US Dollar retracement, led by shockingly disappointing retail sales data, prompted some aggressive long-unwinding trade in the previous session. 

The data overshadowed optimism over a possible resolution of the US-China trade spat and was evident from a slight deterioration in investors’ appetite for riskier assets, which provided an additional boost to the Japanese Yen's safe-haven status. 

The prevalent cautious mood continued underpinning demand for traditional safe-haven currencies and kept exerting downward pressure on the major, albeit some renewed USD buying helped ease the bearish pressure and bounce off multi-day lows.

Today's US economic docket features some second-tier data Empire State Manufacturing Index, industrial production data and Prelim UoM Consumer Sentiment, which will be looked upon for some short-term trading impetus on the last trading day of the week. 

Technical outlook

Yohay Elam, FXStreet's own Analyst offers some important technical levels to watch out for: “The most significant cushion awaits at around 110.06 where we see the Pivot Point one-day Support 2, the Fibonacci 23.6% one-week, and last month's high, a potent mix.”

“Looking up, the pair faces some resistance at 110.56 where we see the confluence of the Pivot Point one-week Resistance 2 and the previous 4h high. More importantly, 110.71 is a juncture including the SMA 100-15m, the BB 4h-Middle, and the Fibonacci 38.2% one-day,” he added further.