USD/JPY bears looking to retake some ground back below 112.80 resistance

USD/JPY is reverting back to the downside in the open of Tokyo. Currently, USD/JPY is trading at 112.62, up 0.04% on the day, having posted a daily high at 112.80 and low at 112.57.

The focus overnight was on BoJ's reduction in bond purchases that was a major mover overnight along with China’s central bank’s apparent loosening of its currency management. The BoJ's trimming of buying in super-long JGBs by Y10 bn to Y190 bn leading to taper talk, but not enough conviction to a test of the 112.20 support level and the pair consolidated the overnight supply from the 113.30's, bouncing off 112.36 to 112.77 and settling in for a close of 112.60.

DXY advance of 0.2% capped the yen overnight

However, it was the dollar's advance of 0.2% higher in the DXY that capped the yen's advance with the benchmark UST 10yr yield breaking up through psychological 2.5% level and the highest in ten months. Fed fund futures priced the chance of another rate hike in March at 65%. Most US indices making fresh record highs (S&P500 +0.4%).

 USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the selling interest remains strong around the pair. "In the 4 hours chart, the price is developing now below its 100 and 200 SMAs, both lacking directional strength, while technical indicators pared their declines near oversold readings and turned higher, although with very limited strength upward," Valeria added, continuing, "below the mentioned daily low, the pair will likely retest the 112.00 price zone, from where it bounced multiple times since early December."