USD/JPY drops to fresh 12-day lows below 107.50

• Upbeat data from China helped market sentiment improve slightly on Tuesday.
• European stocks trade mixed as investors return from Easter break.
• US Dollar Index extends slide toward 99 handle.

The USD/JPY pair spent the Asian session moving sideways around the 107.70 handle as the upbeat trade balance data from China made it difficult for the JPY to continue to gather strength against the greenback. However, the broad-based USD weakness started to weigh on the pair in the last couple of hour and dragged it to its lowest level since April 2nd at 107.38. As of writing, the pair was trading at 107.47, down 0.26% on a daily basis.

Pair continues to react to changes in risk sentiment

China’s Customs administration on Tuesday announced that the trade surplus widened to $19.9 billion in March to beat the market expectation of $18 billion and helped major Asian equity indexes end the day in the positive territory.

However, European stocks trade mixed on Tuesday to suggest that the risk rally is losing its steam. Nevertheless, US stock index futures are up more than 1% and a strong rebound in Wall Street could keep the JPY’s gains capped in the second half of the day.

Meanwhile, the US Dollar Index is posting losses for the fourth straight day on Tuesday to allow the pair to remain in the negative territory. There won’t be any significant macroeconomic data releases from the US in the remainder of the day and the risk perception is likely to continue to impact the pair’s movements.

Technical levels to watch for