USD/JPY recovers a major part of early dip to over 1-week lows, looks to retake 112.00 mark
| • Risk-off mood underpins JPY’s safe-haven demand and exerts some downward pressure.
• A modest USD uptick helped limit further downside and defend the very important 200-DMA.
The USD/JPY pair recovered a major part of its early slide to over one-week lows, albeit struggled to capitalize on the move and remained capped below the 112.00 handle.
With global financial markets reopening after the long Easter holiday, a risk-off tone in the Japanese equities underpinned the Japanese Yen's safe-haven demand and exerted some downward pressure during the Asian session on Tuesday.
The Japanese Yen got an additional boost, dragging the pair to an intraday low level of 111.65 in reaction to Japan's Finance Minister Aso's comments, calling the Bank of Japan and the Japanese government's fight against deflation as a mistake.
The pair extended its retracement slide from YTD tops set last Wednesday and bears further took cues from a weaker tone surrounding the US Treasury bond yields, though a modest US Dollar uptick helped defend the very important 200-day SMA.
It, however, remains to be seen if the pair is able to attract any strong follow-through buying amid absent relevant market moving economic releases on Tuesday and as investors look for an increase in volatility ahead of this week's important US macro data.
Technical Outlook
Omkar Godbole, FXStreet's own Analyst and Editor writes, “the spot has established a second bullish higher low along the rising trendline, reinforcing the falling channel breakout seen on April 11. The pair, therefore, appears on track to set another bullish higher high above the recent high of 112.17 and rise toward 113.00.”
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