USD/JPY plunges below 112.00 mark, lowest since early Dec.

   •  BOJ’s move to trim JGB purchases continues to weigh.
   •  Surging US bond yields does little to lend support.
   •  Bears eyeing the very important 200-DMA support. 

The greenback weakened further against its Japanese counterpart, dragging the USD/JPY pair below the 112.00 handle to its lowest level since early December.

Tuesday’s BOJ announcement to trim the size of its JGB purchases fueled speculations that the BOJ could begin tapering its massive monetary stimulus and continued exerting downward pressure for the second consecutive session.

Meanwhile, the latest leg of an upsurge in the Japanese bond yields largely negated the recent run-up in the US Treasury bond yields and did little to lend any support to the major.

Even a prolonged US Dollar recovery move failed to stall the pair's sharp retracement, with possibilities of some stops being triggered on a break below the 112.00 handle seems to have aggravated the depreciating move. 

The pair has now moved within striking distance of the very important 200-day SMA support, which if broken might pave way for an extension of the pair's near-term trajectory amid absent major market-moving economic releases from the US.

Technical levels to watch

The 111.70 region (200-DMA) is likely to act as an immediate support, which if broken is likely to accelerate the fall towards 111.40 intermediate support en-route the 111.00 handle.

On the upside, any recovery attempts back above the 112.00 handle might now confront fresh supply near the 112.25 region and any subsequent up-move might now be capped at mid-112.00s.