USD/JPY clings to modest recovery gains, around 110.70-75 region

   •  US data does little to provide any fresh impetus.
   •  Risk-on mood supportive of the up-move.

The USD/JPY pair held on to its modest recovery gains and had a rather muted reaction to the US economic data.

The pair moved little and remained near the top end of a narrow trading range held since the early European session, around 110.70-75 band, after the US Empire State Manufacturing Index came in at 17.7 for January. 

The reading was below consensus estimates pointing to a reading of 18.0 but, to some extent, was negated by an upward revision for previous month's print, which now stands at 19.6 as against 18.0 reported earlier. 

The data did little to provide any fresh impetus to US Dollar, albeit helped to preserve daily gains, just below mid-90.00s and offset weaker US Treasury bond yields. 

Meanwhile, the global risk-on trade continued weighing on the Japanese Yen's safe-haven appeal and remained supportive of the pair's mildly positive tone through the early NA session. 

With the only scheduled US economic data out of the way, broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum on Tuesday.

Technical outlook

Mohammed Isah, Technical Strategist FXTechstrategy writes: "The pair closed further lower on Monday opening the door for more weakness. This view remains valid despite its present price hesitation. On the downside, support lies at the 110.00 level where a break if seen will aim at the 109.50 level. A cut through here will turn focus to the 109.00 level and possibly lower towards the 108.50 level. On the upside, resistance resides at the 111.00 level. Further out, we envisage a possible move towards the 111.50 level. Further out, resistance resides at the 112.00 level with a turn above here aiming at the 112.50 level. On the whole, USDJPY faces further bearishness."