USD/JPY making headways towards 100-DMA ahead of US tax vote

• DXY, USTs turn southwards.
• US macro news, US tax reform bill vote – key.

The USD/JPY pair tried to take on the recovery above the 112.65/70 barrier in the Asian trades, but in vain, as the sellers continued to lurk amid pre-US House tax vote caution trading.

USD/JPY awaits range breakout

The spot is seen breaking lower from its Asian range-trade, tracking the renewed weakness seen around the US rates after the 10-year Treasury yields ran into 2.40% resistance, as markets digest the latest comments from the FOMC member Kashkari.

More so, increased uncertainty over the effectiveness of the tax cuts scheduled to be passed by the House later today, also keeps the USD bulls on the back foot, keeping the risks tilted towards the downside in the USD/JPY pair. The bears target the next key support at 100-DMA of 112.15 below a break of 112.50 levels.

However, the major is seen clinging to the 112.50 support over the last hours, as the Yen remains undermined by the Japanese government forecasts, which lowered the CPI estimates for this year. Also, expectations of the BoJ to stand pat at its monetary policy meeting on Thursday adds to the weight on the Japanese currency.  

In absence of fresh catalysts in Europe, the sentiment on the European markets and USD dynamics will drive the USD/JPY moves.

USD/JPY Technical View

Valeria Bednarik, Chief Analyst at FXStreet, explained, " The pair is still biased lower, according to technical readings on the 4 hour chart, as the price develops below its 100 and 200 SMAs that anyway continue lacking directional strength, while technical indicators hover within negative territory, also failing to indicate a certain prevailing demand. Support levels: 112.00 111.60 111.20. Resistance levels: 112.80 113.10 113.45.”