USD/JPY benefits from risk-reversal, but for how long?

Risk reset remains the underlying theme in Asia this Thursday, with a brief stint of recovery witnessed across the markets, including the equities, treasury yields and the USD.

Hence, the USD/JPY took on the overnight recovery above 111.50, before meeting supply near 111.60 region, as markets raise concerns that the rebound could well be a dead-cat bounce or just a minor profit-taking rally after yesterday’s slump to four-month lows of 110.73.  

More so, investors may once again turn cautious heading into the crucial Obamacare replacement (Trumpcare) bill vote in the House of Representatives late-Wednesday, especially in light of renewed concerns over Trump’s administration policies and lingering allegations his campaign had links to Russia. 

On the data-front, there is nothing relevant on the cards from the US docket today, except for the jobless claims and new home sales data, although Fedspeaks will be closely eyed.

USD/JPY Technical levels to watch             

The major finds immediate resistance at 111.93/96 (Fib R2/ 5-DMA). A break above the last, the major could test 112.33 (classic R2 & Fib R3) and 112.89 (10-DMA/ classic R3) beyond the last. While to the downside, the immediate support is seen at 111 (round number) next at 110.73 (multi-week low) and below that at 110.23 (week ended Nov 20 lows).