USD/JPY retreats from highs, still manages to hold above 112.00 mark

Haresh Menghani FXStreet

The USD/JPY pair surrendered majority of its early gains to mid-112.00s and has now retreated to the lower end of Asian session trading range.

The pair did recover Friday's N. Korean headlines-led sharp drop and was being supported by weaker than expected Japanese flash manufacturing PMI for September.

The modest up-move, however, seemed losing steam after the Japanese government, in its monthly economic assessment, said that the economy is still on moderate recovery path.

This coupled with new setbacks for the US health care bill - to repeal and replace the Obamacare health insurance program, further collaborated towards keeping a lid on the pair's up-move.

• GOP leaders circulating proposals to cut the corporate tax rate to 20%

Investors now look forward to the Japanese PM Shinzō Abe's likely news conference at 0900GMT, where he is anticipated to order a 2-trillion yen stimulus package to increase spending on child care and education.

• Japan’s PM Abe to hold news conference at 0900 GMT - RTRS

Technical levels to watch

Bulls would be disheartened if the pair fails to defend the 112.00 handle, below which the slide could get extended towards 111.55 intermediate horizontal support en-route the 111.10-111.00 region.

On the upside, sustained move beyond mid-112.00s has the potential to continue lifting the pair towards 112.70 level ahead of the 113.00 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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