USD/JPY refreshes session lows near 111.75, FOMC in focus

Having failed to sustain early up-move beyond the 112.00 handle, the USD/JPY pair drifted into negative territory and dropped to fresh session lows during the mid-European session. 

Currently trading around the 111.75 region, the pair shrugged off a modest US Dollar recovery and eroded part of previous session's strong gains as investors remain skeptic over any fresh hawkish surprise from the FOMC statement. Heading into the key event risk, traders also seemed to position themselves against an unexpected dovish tilt, which is eventually boosting the Japanese Yen's safe-haven demand. 

Even the prevalent risk-on environment, as depicted by strong gains across European equity markets did little to extend any support, with repositioning trade acting as an exclusive driver of the pair's movement through European session. 

On the economic data front, today's release of new home sales data is unlikely to be a game changer but could provide some impetus for short-term traders. 

Technical levels to watch

Immediate support is pegged near mid-111.00s, below which the pair could slide back to 111.15-10 horizontal support ahead of the 111.00 handle. On the flip side, the 112.00 handle now seems to have emerged as an immediate strong hurdle, which if conquered might trigger a short-covering rally towards 112.55-60 horizontal resistance en-route 112.95-113.00 region.