USD/JPY drops to lower end of weekly trading range, around mid-112.00s

The USD/JPY pair came under some selling pressure on Wednesday and has now dropped to the lower end of its weekly trading range.

A modest US Dollar retracement from 7-week tops failed to assist the pair to build on its early up-move beyond the 113.00 handle on Tuesday. The pair subsequently met with fresh supply near the 113.20-25 region and extended overnight retracement from closer to 2-1/2 month highs touched last week.

Adding to this, the prevalent cautious environment around equity markets, leading to a mildly softer tone around the US Treasury bond yields, provided a minor boost to the Japanese Yen's safe-haven appeal and further collaborated to the pair's retracement to mid-112.00s. 

Today's US economic docket features the release of ADP report on private sector employment, followed by ISM non-manufacturing PMI. This coupled with the Fed Chair Janet Yellen's scheduled speech would now be looked upon for some fresh impetus ahead of this week's key event risk - NFP on Friday.

Technical levels to watch

A follow through selling pressure below mid-112.00s has the potential to continue dragging the pair towards 112.20 intermediate support ahead of the very important 200-day SMA support near the 112.00-111.95 region.

On the upside, 112.80-85 zone now seems to act as immediate resistance, above which the pair is likely to move back above the 113.00 handle and make a fresh attempt to conquer 113.20-25 strong supply zone.