USD/JPY fills weekly bearish gap, but struggling to gain follow through traction

The USD/JPY pair caught some fresh bids at lower levels and managed to fill the weekly bearish gap to the 111.00 handle. 

The pair has now reversed Friday's minor losses and was seen benefitting from improving investors' appetite for riskier assets - like equities, which tends to weigh on the Japanese Yen's safe-haven appeal. The Japanese Yen was also weighed down by today's Japanese trade balance data, showing a larger-than-expected shrinkage in trade surplus led by a drop in exports. 

Moreover, growing prospects for an eventual Fed rate-hike move at its June meeting supported a modest up-tick in the US treasury bond yields and eventually underpinned the greenback demand. In fact, the key US Dollar Index has managed to bounce off 6-month lows touched on Friday and further collaborated to the pair's rebound from the 111.00 handle. 

Meanwhile, market seems to have shrugged off the latest missile test by N. Korea and also seems to look beyond the ongoing political turbulence around the Trump administration. 

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Next in focus would be speeches by couple of FOMC members - Philadelphia Fed President Patrick Harker and Minneapolis Fed President Neel Kashkari, which would be looked upon for fresh insight over the central bank's near-term monetary policy outlook and eventually provide some impetus later during the day.

Technical levels to watch

Immediate resistance is pegged near 111.70-75 area, above which the pair is likely to surpass the 112.00 handle and head towards testing its next hurdle near 112.40-45 region. On the downside, retracement back below 111.30-25 area might continue to find support near the 111.00 handle, which if broken could accelerate the slide back towards 110.85-80 intermediate support en-route Thursday's swing low support near 110.25 level.