USD/JPY: bears in full control, drops to nearly 4-month lows

The greenback remained heavily offered against its Japanese counterpart, with the USD/JPY pair extending its bearish slide for the seventh consecutive session to hit nearly four month lows.

Currently trading around 111.40-30 band, a fresh wave of global risk-aversion trade provided an additional boost to the Japanese Yen's safe-haven appeal and prolonged the pair's break-down momentum below the 100-day SMA support. 

Adding to this, perceived less hawkish Fed monetary policy outlook continues to weigh on the US Dollar and further collaborated to the pair's downward trajectory to the lowest level since late Nov. 2016.

On the economic data front, better-than-expected Japanese trade surplus data lend additional support to the strong bid tone surrounding the Japanese Yen. 

Later during the NA session, existing home sales data is the only highlight from today's US economic docket and hence, broader market risk sentiment would continue to be a key driver of the pair's movement on Wednesday.

Technical levels to watch

On a sustained weakness below 111.35 (Nov. 28 low), the pair is likely to break through the 111.00 handle and head towards 110.75 intermediate support ahead of the key 110.00 psychological mark.

Meanwhile on the upside, any recovery attempt might now confront immediate resistance near 111.70 level, above which a bout of short-covering might lift the pair back above 112.00 mark towards testing its next resistance near 112.50-60 region.