USD/JPY inching closer to 113.00 handle ahead of US data

The USD/JPY pair extended previous session's retracement move and is slowing inching back closer to the 113.00 handle.

Currently trading around 113.10-15 region, testing session lows, the pair remained on back foot for the second consecutive day amid mildly cautious sentiment surrounding European equity markets. Moreover, a follow through slide in the US Treasury bond yields undermined the greenback demand and collaborated to the softer tone surrounding the major. 

Despite of Wednesday's minutes from the Fed’s most recent meeting indicated policymakers’'  desire to hike rates “fairly soon”, market participants seemed convinced that uncertainty surrounding the US President Donald Trump’s fiscal policies would force the central bank to rate-hike move. The same is reflected in the CME group's FedWatch Tool, which currently points to 18% probability of such an action at the central bank's upcoming meeting in March.

On the economic data front, the release of weekly jobless claims data from the US might provide some impetus for short-term traders. Meanwhile broader market risk-sentiment and Fed rate-hike expectations would remain key determinants of the pair’s near-term direction.

Technical levels to watch

A follow through selling pressure below 113.00 handle, leading to a subsequent break below 112.90 level (yesterday's low), the pair seems to extend the slide towards 112.40 horizontal support, en-route 112.00 round figure mark. 

On the flip side, 113.45-50 region now becomes immediate resistance and is followed by another hurdle near 113.75-80 region. A decisive move above 113.75-80 region now seems to assist the pair beyond 114.00 handle towards its next strong resistance near 114.25-30 region.