USD/JPY bounces off lows, still struggling near mid-113.00s

   •  USD rebounds despite weaker weekly jobless claims.
   •  Pickup in US bond yields lending some support.
   •  Risk-off mood might cap any meaningful up-move.
   •  US tax bill legislation remains in focus.

The greenback selling pressure seems to have abated, with the USD/JPY pair rebounding around 25-pips from 1-1/2 week lows touched in the past hour. 

A modest US Dollar rebound, despite a larger than expected jump in the US weekly jobless claims, seems to have prompted some short-covering move during the early NA session. Adding to this, a goodish pickup in the US Treasury bond yields extended additional support to the pair's tepid recovery bounce from the 113.25 support area.

   •  US: Weekly initial claims was 239,000, an increase of 10,000 from previous week

However, the prevalent risk-off environment, as depicted by a sea of red across global equity markets, continues to underpin the Japanese Yen's safe-haven appeal. This coupled with increasing nervousness, ahead of the long-awaited US tax reforms announcement might now contribute towards keeping a lid on any meaningful recovery for the major.

The Senate Republicans are expected to unveil their tax bill today, and a substantial difference from the proposal put forth by House Republicans could further deteriorate the already weaker sentiment around the greenback and continue exerting downward pressure on the major.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: "The pair bounced modestly from the mentioned low but retains the negative bias short-term, as in the 4 hours chart, the price broke again below its 100 SMA, extending its decline further, while technical indicators remain within negative territory, with strong downward slopes. Below the 113.20 level, the decline could extend down to 112.90, while beyond this last a steeper slide should be expected for the upcoming days."