USD/JPY drops further, testing sub-113.00 levels

The bearish note around the greenback stays intact on Tuesday, now dragging USD/JPY to levels below the 113.00 handle, fresh lows.

USD/JPY stronger on USD-selling

Spot is now intensifying its decline to fresh 7-week lows in the 112.85/80 band, as the buck remains well offered across the board.

The Trump-led rally that benefited the Dollar following the US elections in early November seems to be running out of steam for the time being, with scepticism on the rise over the ability of the upcoming administration to fulfil his promises –particularly regarding fiscal stimulus.

On the data front, the US regional manufacturing gauge tracked by the NY Empire State index is due along with speeches by New York Fed W.Dudley (permanent voter, centrist) and L.Brainard should keep the focus on the Dollar.

USD/JPY levels to consider

As of writing the pair is retreating 1.18% at 112.85 facing the next support at 111.98 (38.2% Fibo of the November-December 2015 up move) followed by 111.32 (low Nov.28) and then 109.91 (50% Fibo of the November-December 2015 up move). On the other hand, a break above 114.28 (high Jan.17) would open the door to 114.54 (23.6% Fibo of the November-December 2015 up move) and finally 115.53 (high Jan.12).