USD/JPY flirting with lows ahead of US data and Fedspeaks

The greenback continued weakening against its Japanese counterpart, with the USD/JPY pair gravitating to fresh one-week lows below the 113.00 handle.

The Fed Chair Janet Yellen, during her congressional testimony, said that the Fed Funds rates were close to neutral policy stance and also reaffirmed gradual rate hikes. Market reaction, however, suggested that investors perceived the remarks as less hawkish. The same was evident from tumbling US Treasury bond yields and the narrowing yield spread turned in favor of the Japanese Yen.  

Further downside has been limited amid a modest US Dollar recovery and a mildly positive trading sentiment around European equity markets, which did little to boost the Japanese Yen's safe-haven demand and has held the pair around the 113.00 mark.

Investors now look forward to the release of US monthly PPI and weekly jobless claims, followed by Yellen's second day of testimony and Fedspeaks, for some fresh impetus. 

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Technical levels to watch

Immediate support is seen near 112.75-70 region, below which the pair could correct back to 112.30 horizontal support before eventually breaking below the 112.00 handle towards testing 100-day SMA support near 111.80-75 region.

On the upside, any up-move now seems to confront resistance near 113.30 level, which if cleared could assist the pair back towards reclaiming the 114.00 handle.