USD/JPY maintains bearish bias well below 114.00 handle

The USD/JPY pair ran through some fresh offers near 113.80 region, stalling its minor recovery attempt, and might now be heading back towards the lower end of daily trading range.

Long-dollar unwinding trade remained the key theme on Monday after the US President Donald Trump’s inauguration speech failed to provide any details over his plans for economic stimulus. However, a mild recovery in the US treasury bond yields provided a much needed respite and helped the key US Dollar Index to hold its neck above 100.00 psychological mark. 

The recovery, however, remained short-lived amid prevalent risk-off environment, which tends to benefit the Japanese Yen's safe-haven appeal. Investors' risk aversion mood is clearly depicted by weaker trading in the European equity markets and indication of a softer opening in the US. 

With the underlying uncertainty around Trump’s administration, and his fiscal stimulus measures to boost the economy, markets now turn their focus on this week's key macro releases from the US (GDP and durable goods orders) and Japan (national core CPI), slated for release on Friday. In the meantime, broader market risk-sentiment and USD price dynamics would remain exclusive drivers for the pair's movement.

Technical levels to watch

Currently trading around 113.40-50 band, immediate support is pegged at session low near 113.20-15 region below which the pair seems more likely to break below 113.00 handle and head towards testing 112.60 important horizontal support (Jan. 17 low). 

On the upside, any recovery attempt above 113.80 level might now confront immediate resistance near 114.00 handle above which the pair is likely to head back towards 50-day SMA hurdle near 114.35-40 region.