USD/JPY flirting with lows near 113.00 handle

The greenback retreated a bit against its Japanese counterpart, with the USD/JPY pair eroding part of previous session's strong gains to seven-week tops near mid-113.00s.

The Japanese Yen benefitted from safe-haven demand following the latest news of a yet another ballistic missile launch by N. Korea. Adding to this, the BOJ Tankan report for the second quarter, showing a moderate rise in the inflation expectations over the 12-month period, provided an additional boost to the Japanese Yen and collaborated to the pair's retracement back to the 113.00 handle. 

   •  Missile N.Korea fired today fast and higher than an IRBM - Yonhap

Meanwhile, the US Dollar continues to find support from the recent upsurge in the US Treasury bond yields, and Monday's upbeat ISM manufacturing PMI, and hence, might collaborate towards limiting any immediate sharp downslide.

It, however, remains to be seen if the current pull-back is being bought into as markets now look forward to a major announcement by N. Korea at 15:30pm local time (7 GMT).

   •  North Korea to make major announcement at 7 GMT - Yonhap

Technical levels to watch

A follow through retracement below 112.75 level is likely to drag the pair back towards 112.50-45 horizontal support, below which the slide could get extended back towards the 112.00 handle.

On the upside, 113.35 level now becomes immediate resistance, which if conquered has the potential to continue boosting the pair further towards 113.75 intermediate resistance en-route the 114.00 handle.