USD/JPY off lows, still in red near 113.50 level

The USD/JPY pair maintained its softer bias through early European session, albeit has managed to bounce off few pips from session lows and is currently hovering around mid-113.00s.

After yesterday's recovery bounce, the pair came under some renewed selling pressure on Tuesday amid persistent greenback selling pressure. In fact, the key US Dollar Index has now slipped below mid-98.00s, weighed down by recent slew of disappointing US macro data, and has been one of the key factors driving the pair lower.

However, a modest up-tick in the US treasury bond yields pointed to a slight improvement in investors’ appetite for riskier assets, further reinforced by recovery in the European equity markets, dented the Japanese Yen's safe-haven appeal and helped the pair to stall its ongoing slide, at least for the time being.

It, however, remains to be seen if the pair is able to register any meaningful up-move or remains under selling pressure amid fading expectations for a faster Fed rate-tightening cycle. 

Later during the NA session, the US economic docket that includes - housing market and industrial production data, would now be looked upon to grab some short-term trading opportunities.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "Bearish price-RSI divergence followed by a falling top formation suggests the pair is likely to breach 113.00-112.89 levels and move towards 112.50 levels. The RSI is sloping downwards and is on the verge of breaking below 50.00 levels, while the accumulation-distribution line is more likely to turn lower once again. The 4-hr chart also shows a bigger rising trend line support around 112.15 levels."