USD/JPY defies resurgent USD demand, drops to session low

The USD/JPY pair snapped two consecutive days of winning streak and traded with bearish bias through Asian session on Wednesday.

The pair remained under some selling pressure as traders seemed to readjust their positions ahead of today's key event risk - the FOMC meeting minutes. Moreover, the pair defied broad based greenback recovery, with the key US Dollar Index reversing early losses and touching multi-week highs near 101.50 region, and touched a fresh session low level of 113.30 during early European session. 

Even the prevalent risk-on mood, as depicted by positive trading sentiment surrounding equity markets, which tends to dent the Japanese Yen's safe-haven appeal, has failed to lend any support and hinder the pair's reversal from three-day high touched on Tuesday.

Investors on Wednesday keenly await the release of minutes from the Fed’s latest monetary policy meeting for fresh clues over the central bank's near-term monetary policy outlook. Today’s minutes would also assist investors gauge possibilities of a rate-hike action at the Fed’s upcoming meeting in March, which would eventually help in determining the pair’s next leg of directional move. 

Technical levels to watch

A follow through retracement below 113.25 level is likely to accelerate the slide towards 113.00 handle ahead of 112.85 horizontal support below which the pair is likely to head towards testing 112.40 strong support area.

On the upside, 113.70-75 region now seems to have emerged as immediate resistance, which if cleared decisively is likely to boost the pair beyond 114.00 handle towards testing its next resistance near 114.25-30 region, en-route 50-day SMA strong hurdle near 114.90-115.00 psychological mark.