The USD/JPY pair maintained its bid-tone during mid-European session on Tuesday and has now recovered nearly 100-pips from multi-week lows near mid-112.00s touched during early Asian session.
Currently trading around 113.45 region, testing session tops, a sharp rebound in the US treasury bond yields helped the key US Dollar Index to recover from 7-week lows and has been a key driver of the pair's recovery from the lowest level since Nov. 30.
Moreover, with UK Supreme Court ruling on Brexit out of the way, a mildly positive sentiment surrounding European equity is further weighing on traditional safe-haven assets, including the Japanese Yen, and collaborating to the pair's spike in the past hour.
Traders on Tuesday will take short-term trading clues from the release of flash manufacturing PMI and existing home sales data ahead of Japanese trade balance data during early Asian session on Wednesday.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet notes, "A failed bullish break from the falling channel followed by a drop to 112.52 suggests the bears remain in control and could take the pair down to 111.40 levels. The rebound seen at the time of writing could run into resistance at 113.62-113.75. Moreover, the daily and 4-hour RSI is yet to hit the oversold territory. Thus, fresh offers are anticipated on the rise. Only an upside break from the falling channel would suggest a temporary low has been made and the spot is moving towards double bottom neckline level of 115.62. The only factor that supports a corrective move is the upward sloping 50-DMA."
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