USD/JPY trims early gains, still holding above 111.00 handle

The USD/JPY pair trimmed some of its early gains and retreated over 30-pips from over 2-week tops touched during early European session.

A slight hint of risk-aversion trade, as depicted by mildly cautious opening in the European equity markets and retracing US treasury bond yields, extended some support to the Japanese Yen's safe-haven appeal. 

Meanwhile, possibilities of traders taking some profits off the table, especially after 250-pips hefty gains in just three trading sessions, could also be one of the factors driving the pair lower. Despite of the pull-back, the pair has held above the 111.00 handle and hence, it would be prudent to wait for a break below the said handle before confirming that the pair might have topped out in the near-term.

Investors on Wednesday will remain focused on the US President Donald Trump's announcement on tax reforms, which would drive sentiment surrounding the US Dollar and provide some fresh impetus ahead of Thursday's BOJ monetary policy decision. 

BoJ to keep its monetary policy unchanged – Danske Bank

Technical levels to watch

A follow through retracement below the 111.00 handle could get extended towards 110.60-55 horizontal support, below which the pair could turn vulnerable to aim back towards retesting the key 110.00 psychological mark.

On the upside, 111.50 area now becomes immediate resistance, above which a fresh bout of short-covering should assist the pair back towards reclaiming the 112.00 handle.