USD/JPY struggling near 112.00 handle ahead of US data/FOMC minutes
• Cautious sentiment prompts fresh selling.
• Rebounding US bond yields lending some support.
• Focus remains on US durable goods/FOMC minutes.
The USD/JPY pair did manage to reverse a dip back below the 112.00 handle but maintained its heavily offered tone through the mid-European session.
Against the backdrop of already weaker sentiment surrounding the US Dollar, a modest retracement in the European equity markets prompted some fresh safe-haven demand and continued exerting some downward pressure for the second consecutive day.
However, a goodish rebound in the longer-term US Treasury bond yields helped limit deeper losses, with the pair quickly rebounding around 15-pips from session lows.
It would now be interesting to see if the pair is able to safeguard the 112.00 handle or bears maintain their dominant position as investors brace for the release of US Durable goods orders ahead of the key FOMC meeting minutes.
Today's important US macro data, along with a fresh update on the Federal Reserve's monetary policy outlook post-December would help investors determine the pair's next leg of directional move.
Technical levels to watch
On a sustained break below the 112.00-111.90 region, the pair is likely to accelerate the slide towards Oct. monthly lows support near 111.65 level. On the upside, any recovery attempt beyond 112.20 level now seems to confront fresh supply near the 112.60-65 region, above which the pair could make a fresh attempt to conquer the 113.00 handle.