• Concerns over US tax bill prompt additional long unwinding.
• Yen get an additional boost from reviving safe-haven demand.
The USD/JPY pair maintained its offered tone through the mid-European session and is currently placed at the lower end of the daily trading range, around the 113.65 region.
The pair extended overnight retracement and remained under some selling pressure on Wednesday amid a mildly softer tone around the US Dollar. News report that the Senate GOP might be considering a 1-year corporate tax cut delay kept the USD bulls on the back-foot and prompted some additional long unwinding trade, especially after the pair once again failed to move past an important supply zone, near the 114.40-50 region.
Adding to this, a strong speech by the US President Donald Trump on North Korea prompted some risk aversion trade and was further seen benefitting the Japanese Yen's safe-haven demand. Speaking in front of lawmakers at South Korea’s national assembly, Trump said that North Korea will face disaster unless Kim Jong-un gives up his nuclear ambitions.
Despite a good two-way move in the past 24-hours, the pair remains within a 5-day old trading range, and hence, it would be prudent to wait for a follow-through selling interest before confirming that the pair might have topped out in the near-term.
Technical levels to watch
A follow through weakness below mid-113.00s is likely to get extended towards 113.25 level en-route the 113.00 handle. On the flip side, the 114.00 handle remains immediate strong resistance, which if conquered could lift the pair back towards 114.45-50 hurdle.
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