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  • The pair drops and bounce off the 110.80 region earlier in the day.
  • US 10-year yields ease from tops near 2.90% level.
  • US housing sector data next of relevance later in the NA session.

After visiting fresh daily lows in the 110.80 region, USD/JPY has now regained 111.00 the figure and looks to recover further ground lost.

USD/JPY looks to data, yields

Spot continues to fade the spike to fresh peaks above the key 113.00 milestone last week, although the 110.80 region has managed to hold the initial downside test for the time being.

Despite the leg lower, the pair remains above the daily cloud, while the 200-day SMA, today at 110.13, also underpins the somewhat constructive view in the longer run.

The Japanese currency is poised to stay under pressure in light of the BoJ meeting next week, where consensus expects the central bank to revise lower its forecasts for inflation, while market participants see unlikely a shit towards a less dovish stance next week. Furthermore, investors should closely follow any comments regarding the FI space, in light of the recent move in yields.

Further out, JPY speculative net shorts increased to the highest level since March 13 during the week ended on July 17, according to the latest CFTC report.

Data wise today, US Existing Home Sales are expected to have expanded at a monthly 0.5% in June, or by 5.46 million units.

USD/JPY levels to consider

As of writing the pair is losing 0.33% at 111.10 and a break below 110.44 (55-day sma) would aim for 110.13 (200-day sma) and then 109.36 (low Jun.27). On the upside, the initial hurdle aligns at 111.41 (high May 22) followed by 112.06 (10-day sma) and finally 113.17 (high Jul.19).