USD/JPY Traders Awaiting For A 2-week Old Range Breakthrough

Persistent geopolitical concerns now seem to be overshadowing prospects for an upcoming rate hike by the US Federal Reserve. Hence, poor performance from the US Treasury bond yields dampened sentiment around the US Dollar and weighed on the USD/JPY pair through the early North American session on Tuesday. The major touched an intraday low level of 112.27 after Russian news agency, Interfax (IFX), quoted a Russian lawmaker saying that North Korea possesses a ballistic missile with a range of 3,000 km and after modernization, it will be able to reach the US territory.

There isn't much in terms of any major market moving economic releases from the US and hence, a scheduled speech by Minneapolis Fed President Neal Kashkari should be looked upon for some immediate respite for the greenback bulls. The key focus, however, will remain on Wednesday's FOMC meeting minutes and until then the pair will remain at the mercy of broader market risk sentiment and the US bond yield dynamics.

Technically, the pair has been oscillating within a broader trading range over the past two-weeks and hence, it would be prudent to wait for a decisive move in either direction before committing to the pair's next leg of directional move.

Follow-through weakness below 112.25 level is likely to accelerate the fall towards testing the very important 200-day SMA support near the 111.90-85 region, which if broken would negate prospects for any additional near-term up-move for the pair.

On the upside, 112.65 level, closely followed by the 112.85 region now seems to have emerged as immediate strong resistance. A convincing break-through the mentioned hurdles should now lift the pair back above the 113.00 handle towards testing the post-NFP swing highs resistance near mid-113.00s.