USD/JPY tumbles to 1-1/2 week low on US political uncertainty

The USD/JPY pair remained under intense selling pressure and has now dropped to a 1-1/2 week low level near 112.35-40 region.

Spot extended last week's reversal move from near two-month highs, beyond the 114.00 handle, and traded with bearish bias for fourth session in the previous five amid persistent US Dollar selling pressure led by lackluster incoming US macro data. Recent data disappointment now seems to have dampened expectations for faster Fed rate-tightening cycle and is eventually weighing on the greenback. 

The bearish sentiment surrounding the buck got aggravated since early Asian session on Wednesday after The New York Times reported that the US President Donald Trump had asked then-FBI Director James Comey in February to drop the investigation into Michael Flynn. The news followed earlier report that Trump shared classified information with top Russian officials at a meeting last week. 

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Political uncertainty in the world's largest economy triggered a fresh way of global risk-aversion trade, also reaffirmed by plunging US treasury bond yields, boosted the Japanese Yen's safe-haven appeal and further collaborated to the heavily offered tone surrounding the major.

With an empty US economic docket, the pair remains at the mercy of broader market risk-sentiment, which favors continuation of the pair's downward trajectory.

Technical levels to watch

Immediate support is pegged near 112.10-112.00 area, below which the pair is likely to accelerate the slide towards 111.50-45 horizontal support en-route the 111.00 handle. On the flip side, 112.70-75 zone now becomes immediate hurdle, which if cleared might trigger a short-covering bounce towards the 113.00 round figure mark ahead of 113.30-35 horizontal resistance.