USD/JPY flirts with weekly lows near 112.70

• USD extends decline on weaker T-yields.
• Headed to 112.50?

The selling pressure around the US dollar got refueled in the early European trading, knocking-off the USD/JPY pair back towards weekly lows of 112.69.

USD/JPY: Range-break awaited

Despite persisting risk-on sentiment, the spot remains well offered amid broad-based US dollar softness in pre-New Year withdrawal of liquidity while the Yen continues to remain underpinned on the back of the recent series of upbeat Japanese macro news. Moreover, repositioning in response to the year-end flows also remains one of the key determinants of the USD/JPY price-action so far this week.

The spot, “despite swinging broadly sideways in New York morning Thursday following intra-day selloff which began during Tokyo lunch break to session lows of 112.67 in Europe on broad-based usd's weakness. The pair briefly jumped to 112.99 on short covering after release of upbeat U.S. Chicago PMI. Price later moved narrowly for rest of New York session n briefly bounced to 112.97 at Tokyo open but only to fall back to intra-day low of 112.69,” the AceTrader team notes.

USD/JPY Technical View

FXStreet’s Chief Analyst, Valeria Bednarik, explained, “Technically, the risk has leaned toward the downside for the short term, as in the 4 hours chart, the pair remains below its 100 SMA, having met selling interest around it during the US session, while technical indicators remain within bearish territory, slowly turning south. The immediate support comes now at 112.60, with a break below the level opening doors for an extension sub-112.00. Support levels: 112.60 112.20 111.75. Resistance levels: 113.00 113.35 113.70.”