USD/JPY retakes 113.00 and beyond

Having dropped to fresh multi-week lows, the USD/JPY pair staged a goodish recovery and is now building on to its momentum back above 113.00 handle.

Currently trading around 113.15-20 region, testing session tops, the pair reversed some of Monday's sharp drop, and subsequent slide to the lowest level since Nov. 30 during early Asian session on Tuesday, amid broad based greenback recovery. 

Comments from the US Treasury Secretary pick Steven Mnuchin, favoring a weaker Dollar, added on to the US Dollar selling pressure in wake of Trump's withdrawal from the Trans-Pacific Partnership (TPP), protectionist stance and lack of details over his proposed fiscal stimulus measure. 

Moreover, better-than-expected Japanese manufacturing PMI print for January provided an additional boost to the Japanese Yen. 

However, a broad based US Dollar recovery, supported by a bounce in the US treasury bond yields, helped the pair regain some traction. Markets on Tuesday will remain focused on the UK Supreme Court's ruling on Brexit, which would drive investor sentiment towards risk-associated assets and eventually derive demand for the Japanese Yen’s safe-haven appeal. 

Later during NA session, flash manufacturing PMI and existing home sales data from the US might also provide some short-term trading impetus.

Technical levels to watch

A follow through momentum above 113.35 level now seems to confront resistance near 113.65 area above which the pair seems all set to head towards reclaiming 114.00 handle and aim towards testing 50-day SMA strong resistance near mid-114.00s.

On the downside, sustained weakness below multi-week lows support near 112.55-50 region is likely to accelerate the slide towards 112.00 round figure mark, which if broken seems to pave way for continuation of the pair’s corrective slide towards 111.60 region ahead of 111.35 (Nov. 28 low).