• A modest uptick in the US bond yields/USD helped gain some positive traction.
• Improving risk-sentiment weighs on JPY and remains supportive of the up-move.
• A strong follow-through buying needed to confirm a near-term bottom.
The USD/JPY pair caught some fresh bids on Tuesday and recovered a major part of its overnight slide to near one-month lows.
With investors looking past previous session's disappointing US monthly retail sales data, the US Dollar regained some positive traction and was seen as one of the key factors driving the pair higher.
Bulls also seemed to track a mildly positive tone around the US Treasury bond yields, with a slight improvement in global risk-appetite weighing on the Japanese Yen's safe-haven demand and providing an additional lift.
However, diplomatic tensions between Saudi Arabia and the West, over the disappearance of journalist Jamal Khashoggi, kept a lid on any runaway rally, with bulls struggling to build on the momentum further beyond the 112.00 handle.
In absence of any major market moving economic releases, it would prudent to wait for a strong follow-through buying interest before confirming that the pair might have bottomed out in the near-term.
Technical levels to watch
Immediate resistance is pegged near the 112.25 level and is closely followed by the 112.55-60 supply zone, above which the pair seems all set to aim towards reclaiming the 113.00 handle. On the flip side, the 111.75 level now seems to protect the immediate downside, which if broken is likely to accelerate the fall towards 100-day SMA support near the 111.35 region.
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