USD/JPY off-highs, tracks Nikkei, T-yields lower

USD/JPY fades a spike to 112.25 region, and now reverts to 112 handle amid a softer tone seen on the Japanese stocks as well as in the US treasury yields.

USD/JPY hovers above 10-DMA at 111.94

The major is seen consolidating around 112 handle over the last hour, having failed sustain the recovery at higher levels as slightly risk-averse market environment keeps the safe-haven yen underpinned at the expense of the higher-yielding treasury yields.

Moreover, the yen also finds some support from better-than expected Japanese retail sales and household spending data released earlier on the day.

However, the retreat in the USD/JPY pair remains capped amid a brief phase of upside consolidation seen in the US dollar across the board, as the buck consolidates the Trump-win backed rally.

The spot now awaits fresh impetus from the upcoming US macro news, the prelim GDP and consumer confidence data, for next direction. While speeches from the Fed official Dudley and Powell due later on Tuesday, will be also closely heard. However, the main risk event for this week remains the US payrolls data due out on Friday.

USD/JPY Technical levels to watch 

The major finds immediate resistance at 112.24 (daily high). A break above the last, the major could test 112.61 (5-DMA) and 112.94 (R1) beyond the last. While to the downside, the immediate support is seen at 111.43 (1h 200-SMA) next at 111.15 (daily S1) and below that at 110.80 (Nov 23 low).