USD/JPY firm above 110.00 handle

Having dropped to session lows near 109.40 region, the USD/JPY pair regained traction and was seen building on to its move back above the key 110.00 psychological mark.

The pair traded with positive bias for the second consecutive day and extended previous session's recovery move from 7-week lows. A modest pick-up in the US treasury bond yields underpinned the US Dollar demand and supported the bid tone surrounding the major.

Moreover, improving investors' appetite for riskier assets - like equities, further dented the Japanese Yen's safe-haven appeal and collaborated to the pair's up-move to session tops near 110.10-15 region.

The up-move, however, lacked strong follow through momentum amid cautiousness ahead of the key testimony by former FBI Chief James Comey before the Senate Intelligence Committee.

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Investors now look forward to the ECB announcement, due in a short while from now, which might lead to some unusual volatility in financial markets and drive investors back towards traditional safe-haven assets, including the Japanese Yen.

On the economic data front, the release of weekly jobless claims is likely to be overshadowed by important political and economic events, including the UK general election.

Technical levels to watch

From current levels, 110.35-40 area is likely to act as immediate resistance, above which a fresh bout of short-covering could lift the pair towards 11.75 horizontal level en-route the 111.00 handle.

On the downside, weakness back below 110.85 support might continue to find some support near 109.40 level, which if broken should accelerate the slide back towards 1-1/2 month lows support near 109.20-10 region.