USD/JPY struggles to extend overnight recovery move, capped below 113.00 handle

The USD/JPY pair struggled to build on overnight sharp rebound from weekly lows and traded with minor weakness below the 113.00 handle.

The pair on Wednesday recovered around 50-60 pips from intraday lows in wake of stronger than expected ADP report, solid US ISM non-manufacturing PMI and the ongoing record setting rally in the US equity markets. 

The up-move, however, lacked any strong follow through traction and the pair remained capped below the 113.00 handle amid declining US Treasury bond yields, which did little to provide any fresh bullish impetus to the recent US Dollar rally. 

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Meanwhile, the prevalent cautious environment around Asian equity market was also seen lending some support to the Japanese Yen's safe-haven appeal and contributing towards keeping a lid on the pair's up-move.

Currently trading around the 112.75-70 region, traders might now take cues from today's US economic docket, featuring the release of usual weekly jobless claims, trade balance and factory orders data.

The Fed Governor Jerome Powell and Philadelphia Fed President Patrick Harker are also scheduled to speak on Thursday and would also be looked upon for some short-term trading opportunities.

Technical levels to watch

Immediate support is now pegged near 112.60 level, below which the pair is likely to head back towards 112.30 support area before eventually dropping to test the very important 200-day SMA support near the 112.00 handle.

On the upside, the 112.90-113.00 region now seems to have emerged as immediate strong hurdle, which if conquered might now lift the pair beyond recent swing highs resistance near the 113.20-25 area towards its next resistance around 113.60-70 zone.