After an initial dip to sub-112.00 level, the USD/JPY pair bounce off lows and turned positive, snapping three consecutive days of losing streak.
A fresh wave of global risk-off mood, in wake of the weekend news report for another Scottish independence referendum by the UK Prime Minister Theresa May, boosted the Japanese Yen's safe-haven appeal and dragged the pair to its lowest level since Feb. 9 during early Asian session on Monday.
The selling pressure around the major, however, seems to have abated, at least for the time being, amid modest recovery in the US treasury bond yields. The mild recovery move, however, lacked conviction as market participants remain dissatisfied with the lack of clarity on the US President Donald Trump's promised fiscal stimulus measures. Hence, the US President Donald Trump's first address to Congress on Tuesday would now be the next big fundamental trigger determining the pair's next leg of directional move.
On the economic data front, the release of durable goods orders and pending home sales features Monday's US economic docket and would be looked upon for some impetus during NA session.
Technical levels to watch
Currently trading around 112.25 level, a follow through recovery above 112.35-40 resistance is likely to get extended towards 112.75 horizontal resistance, above which the pair is likely to surpass 113.00 handle and head towards its next resistance near 113.20-25 region. On the flip side, weakness back below 112.00 handle, leading to a subsequent break below 111.90 level, would turn the pair vulnerable to break below 111.60 strong horizontal support and head towards testing 111.10-111.00 support area.
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