USD/JPY up little, marginally above 112.00 handle

The USD/JPY pair extended previous session's rebound from 111.70-65 important confluence support and is now looking to build on its move back above the 112.00 handle.

T modest pickup in the US Treasury bond yields helped the US Dollar to stall overnight sell-off to the lowest level since September and has been a key driver of the pair's mild positive bias. 

This coupled with a stable trading session in Asian equity markets was also seen weighing on the Japanese Yen's safe-haven appeal and further collaborated to the pair's up-move to session tops around 112.10-15 region.

Traders, however, seemed lacking conviction and look forwards to the next big event risk - Thursday's BoJ monetary policy decision, before committing to the pair's next leg of directional move.

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Today's US economic docket, featuring the release of building permits and housing starts would be looked upon for some trading impetus later during the NA session.

In the meantime, broader market risk sentiment and the US bond yield dynamics seems to act as key determinants of the pair's movement through European trading session.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "The spot looks set to re-test previous day’s lows around 111.65 and possibly breach the support zone around 111.70 on an end of the day closing basis in favor of 110.90. (110.98 is 61.8% Fib R of 108.80-114.49 and 110.93 is 161.8% Fib ext of 114.49-112.86-113.58). Only a bullish break of the falling channel would signal bearish invalidation, although on a larger scheme of things, the outlook remains bearish as long as the US-Japan 10-year yield spread remains below the 200-DMA level of 2.3%."