USD/JPY surrenders early gains, back below 113.00 handle

The USD/JPY pair surrendered all of its early gains, back closer to over 2-1/2 month tops, and has now dropped to the lower end of daily trading range. 

Currently trading around 112.70 level, the pair's sharp slide of around 40-50 pips over the past hour or so, from levels beyond the 113.00 handle, lacked any fresh fundamental trigger and hence, could be solely attributed to a modest US Dollar retracement. 

A minor pull-back in the US Treasury bond yields seems to be only factor that could have prompted some profit taking, especially after the pair's strong up-move of around 125-pips from Tuesday's swing lows near mid-111.00s.

It, however, remains to be seen if the current slide is utilized as a buying opportunity amid the latest political development in Japan and renewed optimism over the US President Donald Trump's tax reform. 

The key highlight from today's US economic docket would be the release of final revision of the GDP numbers, which coupled with the usual weekly jobless claims would now be looked upon for some fresh impetus later during the NA session.

Technical levels to watch

Immediate support is pegged near mid-112.00s, below which the pair could drift back to the very important 200-day SMA, resistance turned support, near the 112.00 handle.

On the upside, momentum back above the 113.00 handle might continue to confront fresh supply near the 113.20-25 region, above which the pair is likely to aim towards testing its next hurdle near mid-113.00s.