USD/JPY struggling below 118.00 handle

The USD/JPY pair seesawed between tepid gains and minor losses within a 60-pips broader range below 118.00 handle and is now heading towards the lower end of daily range. 

Currently trading with mild bearish bias around 117.55 region, broad based greenback retracement has been the key factor confining the pair below 118.00 handle. Investors seemed inclined to take some profits off the table ahead of year-end holidays and following the pair's strong rally to 10-month highs.

Looking at the broader picture, the pair is lacing a follow through buying interest above 118.00 handle. However, even the slightest of pull-back is being bought into, which clearly suggests that the pair's near-term bullish momentum might be still far from over. Market participants are convinced that aggressive fiscal policy by Trump administration will boost US growth and inflation, and force the Federal Reserve to opt for tighter monetary policy stance. 

However, thin market liquidity conditions, ahead of year-end holidays, could trigger some additional profit taking slide ahead of Thursday's US macro releases, including the final print of Q3 GDP growth. In the meantime, the US existing home sales data, later during NA session, might provide some impetus to the pair on Wednesday.

Technical levels to watch

On the downside, 117.00 handle is likely to act as immediate support, which if broken might accelerate the slide towards weekly low support near 116.55 region ahead of the next major support near 116.15-10 zone. On the upside, sustained momentum above 118.00 handle, leading to a subsequent break through 118.20-25 resistance, should open room for an immediate up-move towards multi-month high resistance near 118.65, en-route 119.00 round figure mark.