USD/JPY finds support near 110, rebounds modestly ahead of US GDP data

10-year US T-bond yield clings to small daily gains.
US Dollar Index stays calm near the 97 handle.
Coming up: Weekly jobless claims and Q4 GDP data from the U.S.

The USD/JPY pair slumped to a fresh 2-day low of 110.03 in the European session but reversed its course to recover a large portion of its daily losses in the last hour. As of writing, the pair was down 0.18% on the day at 110.30.

The US T-bond yields extended their losses earlier in the day with the 10-year reference falling to its lowest level in nearly 16 months at 2.342% and allowed the JPY to continue to gather strength against its rivals as a safe-haven. However, the 10-year yield staged a rebound and moved into the positive territory to help the pair retrace its daily drop. Upbeat comments from China’s Commerce Ministry on the U.S.-China trade talks seem to be allowing the market sentiment to turn positive.

Meanwhile, ahead of the important macroeconomic data releases from the U.S., the US Dollar Index is staying calm near the 97 mark, suggesting that investors are waiting to see the data before taking large positions. Markets expect the real GDP to expand by 1.8% in the fourth quarter, down from the previous estimate of 2%. A higher-than-expected reading could ease concerns over an economic slowdown and provide a boost to the pair, and vice versa.

Technical levels to consider

The initial support for the pair is located at 110 (psychological level/daily low) ahead of 109.70 (Mar. 25 low) and 109.40 (Feb. 4 low). On the upside, resistances align at 110.65 (50-DMA), 111 (psychological level/20-DMA) and 111.45 (200-DMA).

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