• US tax bill-led USD selling seems to have abated.
• A pickup in US bond yields also lending support.
• Risk-off mood capping any meaningful recovery.
The USD/JPY pair struggled to build on overnight tepid rebound from the 113.00 neighborhood and was seen oscillating within a narrow trading band, just below mid-113.00s.
The US Dollar selling pressure, triggered by the news that the GOP indeed intends to delay a corporate tax cut until 2019, seems to have abated for the time being. Adding to this, a goodish pickup in the US Treasury bond yields further collaborated towards limiting additional downside.
However, the prevalent risk aversion trade, which tends to benefit the Japanese Yen's safe-haven appeal, did little to help the pair to register any meaningful recovery from 1-1/2 week lows touched yesterday.
On the economic data front, the release of Prelim UoM Consumer Sentiment Index from the US might provide some impetus, later during the NA session. In the meantime, broader market risk sentiment and the US bond yield dynamics would remain key determinants of the pair's movement on the last trading day of the week.
Technical levels to watch
On a sustained weakness below the 113.20-15 immediate support, the pair is likely to accelerate the fall towards 112.80 intermediate support en-route 112.20-15 important horizontal zone.
Meanwhile, on the upside, any recovery attempts might now confront fresh supply near the 113.65-70 region, above which the pair is likely to surpass the 114.00 handle and retest 114.20 hurdle.
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