USD/JPY extends overnight steady rebound from 112.00 handle

   •  USD selling abates on surging bond yields.
   •  Risk-on mood lends additional support.
   •  US ISM PMI might provide some trading impetus.
   •  Focus remains on FOMC meeting minutes.

The USD/JPY pair extended overnight rebound from the 112.00 handle and snapped three consecutive days of losing streak.

Currently trading around 112.35-40 band, the pair has now recovered a part of previous session's slump to 2-week lows and was being supported by a modest US Dollar recovery. A sharp follow-through upsurge in the US Treasury bond yields helped ease the strong USD bearish pressure and remained supportive of the pair's modest uptick. 

The coupled with a positive trading sentiment around equity markets, which seems to have largely offset the latest geopolitical tensions, was seen weighing on the Japanese Yen's safe-haven appeal and further collaborated to the pair's recovery move. 

It would now be interesting to see if the pair is able to build on the momentum or meets with some fresh supply at higher level as traders start repositioning ahead of the release of December FOMC meeting minutes, due later in the US session.

Heading into the key event risk, the US ISM manufacturing PMI print might trigger some short-term momentum play during the early NA session.

Technical levels to watch

Immediate resistance is pegged near 112.50-55 area, above which a fresh bout of short-covering is likely to lift the pair back towards the 112.90-113.00 supply zone. On the flip side, the 112.00 handle remains an immediate strong support to defend, which if broken is likely to accelerate the slide towards the very important 200-day SMA support near the 111.65 region.