USD/JPY struggling to defend 111.00 handle

The USD/JPY pair came under some fresh selling pressure on Tuesday and touched a 3-day low level of 110.86, before bouncing off lows to currently trade around the 111.00 region.

A deadly explosion at the end of a concert in Manchester boosted the Japanese Yen's safe-haven appeal and triggered the initial leg of downslide. This coupled with persistent greenback selling pressure, with the key US Dollar Index dropping farther below the 97.00 handle, further collaborated to the fall. 

The latest political development in the US, along with the recent lackluster US macro data, now seems to have faded expectations for a faster Fed rate-tightening cycle through 2017. The same is being reinforced by continuous slide in the US treasury bond yields, which has failed to extend any immediate support to the greenback and assist the pair to register any meaningful recovery from near one-month lows touched last week.

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Traders now turn their focus to the US economic docket, featuring the release of New Home Sales data, for some fresh impetus. In the meantime, broader market risk-sentiment and the US bond yield dynamics would continue to be key determinants of the pair's momentum through European session. 

Technical levels to watch

Weakness below 110.85-80 immediate support might turn the pair vulnerable to head back towards multi-week lows support near 110.25 level before heading towards the key 110.00 psychological mark. On the upside, any recovery attempts beyond 111.30-35 area now seems to confront strong hurdle near 111.65-70 region, above which a bout of short-covering could lift the pair towards the 112.00 handle, en-route 112.40-45 strong horizontal resistance.