USD/JPY reverse early gains, slide further below below 115.00 handle

The USD/JPY pair reversed all of its early gains to session peak level of 115.20 and retreated farther below the key 115.00 psychological mark, back towards the lower end of daily trading range near 114.85-80 band. 

Higher US treasury bond yields continued to underpin the US Dollar demand through European trading session on Tuesday and helped the pair to extended previous session's recovery move from mid-114.00s. 

However, the prevalent cautious investors' sentiment, amid pre-FOMC nervousness, was seen supporting the Japanese Yen's safe-haven appeal and failed to assist the pair to build on early gains. Adding to this, political uncertainty, ahead of the Dutch election on Wednesday, also collaborated towards restricting any further upside for the major. 

Investors will remain focused on Wednesday's key FOMC monetary policy decision, ahead of the BoJ announcement on Thursday, for the pair's next leg of direction move. 

Technical levels to watch

Omkar Godbole, Analyst and Editor at FXStreet notes, "a weak follow through after the breach of the rising trend line, coupled with the fact that the RSI is above 50.00 indicates a break above 115.00 (rising trend line hurdle) would open doors for 115.45 (0.618 fib expansion level). On the downside, the channel support is seen around 114.28."

"Despite Friday’s retreat from the high of 115.50 to 114.65, the outlook remains positive given the losses have been restricted around 5-DMA and the fact that the 5-DMA and 10-DMA are still sloping upwards. Thus, a re-test of 115.45 appears likely ahead of the Fed decision. A daily close above 115.45 would open doors for 116.62."