USD/JPY trims early gains, retreats back below 111.00 handle

The USD/JPY pair surrendered majority of its early gains and retreated around 25-pips from session tops near 111.25 region.

The prevalent cautious sentiment around global financial markets, in wake of political uncertainty stemming out of the upcoming UK general election, was seen lending support to the Japanese Yen's safe-haven appeal. 

Even today's slightly better-than-expected Chinese PMI prints failed to lift investor sentiment and the pair slipped back below the 111.00 handle, despite of a broad based US Dollar strength led by a solid recovery in the US treasury bond yields.

Looking at the broader picture, the pair has struggled to register any meaningful recovery from near one-month lows touched on May 18 and hence, remains vulnerable to extend its near-term downward trajectory. The pair is now inching closer to session low touched during early Asian session, which if broken would reaffirm the bearish bias.

On the economic data front, the release of Chicago PMI and Pending Home Sales data are due for release from the US later during the NA session. In the meantime, broader market risk sentiment might continue to act as an exclusive driver of the pair's movement through European trading session.

Technical levels to watch

Weakness below 110.70-65 immediate support is likely to drag the pair immediately towards 110.25 level (May 18 low) below which the downslide could get extended even below the key 110.00 psychological mark towards testing its next support near the 109.65-60 region.

On the flip side, 111.25 level now seems to have emerged as immediate hurdle, above which a bout of short-covering could lift the pair towards 111.80 important resistance en-route the 112.00 handle.