USD/JPY steadies near 111 ahead of 10-year note auction

• US Dollar Index consolidates near 95.20.
• Wall Street fails to preserve its momentum.
• U.S. 10-year T-bond auction will be watched next.

After coming under a heavy selling pressure during the late Asian session and falling to a fresh weekly low at 110.84, the USD/JPY pair retraced a small portion of its daily losses but failed to stay above the 111 mark. As of writing, the pair was trading at 110.90, losing 0.45% on the day.

Earlier today, the data from China showed that the trade surplus declined by much more than expected amid a big jump seen in imports to show the negative impact of trade tariffs. The dismal data weighed on the market sentiment and allowed traditional safe-havens such as the JPY gain strength against their peers.

In the early trading hours of the NA session, the pair was able to recover modestly after the US Dollar Index marched north on the back of Richmond Fed President Barkin's hawkish comments. Barkin said that further gradual rate hikes were appropriate with the tight labor market conditions and the inflation rate. Although the US Dollar Index turned positive and rose to 95.40 in the session, it failed to stay in the positive territory and was last seen at 95.20, where it was virtually unchanged on the day.

In the next hour, the Fed is going to auction out 10-year T-bonds. Yesterday, 3-year bonds sold at its highest level since May at 2.765% and helped the USD gather strength in the US afternoon.

Technical outlook

The pair could face the first support at 115 (100-DMA) ahead of 109.40 (Jun. 26 low) and 108.95/109 (May 24 low/psychological level). On the upside, resistances align at 111 (psychological level/50-DMA), 111.50 (daily high/20-DMA) and 112.15 (Aug. 1 high).