USD/JPY finds decent support ahead of the 112.00 handle
| • USD weighed down by the latest US tax-bill uncertainty.
• BOJ headlines & surging US bond yields help recover lost ground.
• Today's second-tier US economic data unlikely to be a game changer.
The USD/JPY pair once again managed to bounce off the 112.00 neighborhood and has now recovered a major part of its early lost ground.
The pair remained on the defensive for the third consecutive session amid a modest US Dollar weakness led by some renewed uncertainty over the Republican-led tax cut bill. The greenback lost some of its upbeat macro data-led overnight gains after two Republican senators were reported to have sought changes to the proposed legislation to overhaul the US tax code.
The initial downtick, however, is now turning out to be short-lived, with the pair quickly recovering back to the top end of its daily trading range, around the 112.35-40 region. The latest leg of up-move was supported by a Bloomberg headlines, citing that the Bank of Japan (BoJ) is said to tweak message as dissenter calls for more easing.
Adding to this, a goodish pickup in the US Treasury bond yields, which although failed to revive the USD demand, but provided an additional boost to the pair's modest uptick through the Asian session.
Meanwhile, the market seems to have largely ignored today's mixed Japanese data that showed an uptick in Tankan manufacturing index but was negated by a miss on the Tankan non-manufacturing index.
Traders now look forward to second-tier US economic data - Empire State Manufacturing Index, Industrial Production and Capacity Utilization Rate, for some fresh impetus later during the early NA session.
Technical levels to watch
A follow-through up-move beyond mid-112.00s could assist the pair to make a fresh attempt towards clearing the 112.90-113.00 supply zone and head towards its next major hurdle near the 113.50-55 region.
On the flip side, the 112.10-112.00 region remains an immediate strong support to defend, which if broken is likely to accelerate the fall towards the very important 200-day SMA support near the 111.65-60 region.
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