USD/JPY flirting with lows near mid-113.00s

After yesterday's sharp bounce, the USD/JPY pair came under some renewed selling pressure and retreated back below mid-113.00s.

The pair failed to build on overnight gains and failed ahead of the 114.00 handle amid persistent US Dollar selling, backed by the incoming downbeat US economic data. Adding to Friday's dismal retail sale and inflation data, the Empire State Manufacturing Index unexpectedly slipped into contraction territory during May and was seen weighing on the greenback. 

Meanwhile, a modest retracement in the US treasury bond yields also did little to extend any immediate support to the buck, while the cautious sentiment around equity markets was seen supporting the Japanese Yen's safe-haven appeal and resulted into the offered tone surrounding the major. 

Market seems to have largely ignored Bank of Japan Governor Kuroda comments, showing readiness to add more stimulus if 2% inflation target is not met, with the prevalent bearish sentiment surrounding the greenback and market risk sentiment acting as key determinants of the pair's momentum on Tuesday.

Later during the day, the US economic docket that includes - housing market and industrial production data, would now be looked upon for some fresh impetus. 

Technical levels to watch

Immediate support is pegged near 113.35 level, below which the pair is likely to head towards testing the 113.00 handle before eventually dropping further to test its next support near 112.75-70 area. On the upside, 113.75-80 region now seems to have emerged as immediate hurdle, which if cleared could lift the pair back above the 114.00 handle towards testing its next major hurdle near 114.25-30 region.