USD/JPY faces rejection near 50-DMA, back below mid-112.00s

   •  Fails to extend overnight strong recovery move.
   •  USD weighed down by weaker US bond yields.
   •  Traders shrug-off risk-on mood. 

The USD/JPY pair came under some renewed selling pressure on Tuesday and is currently placed at fresh session lows, just below mid-112.00s.

The pair struggled to build on overnight strong recovery move from one-month lows and is now retreating from the 50-day SMA, support turned resistance, near the 112.70-80 region. A mildly softer tone around the US Treasury bond yields kept the US Dollar bulls on the defensive and has been one of the key factors weighing on the major. 

Even improving investors’ appetite for riskier assets, as depicted by the prevalent positive trading sentiment around equity markets and which tends to dent the Japanese Yen's safe-haven appeal, did little to lend any support and stall the downslide. 

Later during the NA session, the release of existing home sales data from the US would influence the USD price dynamics and provide some short-term trading opportunities. Against the backdrop of concerns over a key US tax legislation, Wednesday's key US durable goods orders and FOMC meeting minutes would also be looked upon for some fresh impetus. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "A break below 112.34 (1-hour 50-MA) would add credence to the failure to hold above the 5-day MA and shall open doors for a drop to 111.74 (200-day MA)."

"Bullish scenario: A break above 112.73 (inverse head and shoulders neckline) could yield a rally to 113.20 levels" he added.