USD/JPY hits fresh 3-week lows near mid-112.00s and rebounds

   •  USD fails to benefit from today’s mostly in-line macro data.
   •  US tax bill uncertainty continues to weigh.
   •  JPY boosted further by global flight to safety. 

The greenback selling pressure remains unabated, with the USD/JPY pair tumbling to fresh 3-week lows during the early NA session.

The US Dollar bulls failed to gain any respite from today's mostly in-line/better-than-expected US inflation figures, with the pair quickly reversing a spike to 112.85 level and refreshing multi-week lows in the past hour.

After yesterday's upbeat PPI print, the core CPI came in to show a better-than-expected y-o-y rise of 1.8%, the fastest since April 2017, while the headline CPI was in line with expectations at 2.0%. 

   •  US: CPI for all items increases 0.1% in October as shelter index rises

The post-CPI uptick was quickly sold into as the data was seen having little monetary policy implication, with mounting uncertainty over the US tax reform bill continuously exerting downward pressure on the buck. 

Meanwhile, a fresh wave of global risk aversion trade provided an additional boost to the Japanese Yen’s safe-haven demand and was further seen collaborating to the pair’s slide to its lowest level since Oct. 20.

The pair, however, stalled its downward trajectory near mid-112.00s, at least for the time being, as investors now seemed taking cues from the US House Speaker Paul Ryan's comments that House Republicans could approve reconciled tax reform bill that includes repeal of Obamacare mandate.

   •  US Speaker Ryan: Working on improving tax bill - CNBC

Technical levels to watch

Weakness below mid-112.00s is likely to get extended towards 112.20 horizontal support before the pair eventually breaks below the 112.00 handle and test 200-day SMA support near the 111.80 region.

On the upside, the 112.90-113.00 region now becomes immediate resistance, which if cleared might trigger a short-covering bounce towards 113.40-45 resistance.