USD/JPY bulls trying to defend 107.00 handle ahead of US GDP

   •  Follow-through USD strength fails to provide any fresh bullish impetus.
   •  JPY supported by BOJ action to trim long duration bond purchases.
   •  Reviving safe-haven demand adds to the downward pressure.
   •  US Q4 GDP growth figures should now provide fresh impetus.

The USD/JPY pair maintained it’s offered tone through the mid-European session and has now moved on the verge of sliding below the 107.00 handle.

The US Dollar remained supported by growing bets on faster Fed rate hike moves in 2018, especially after the new Fed Chair Jerome Powell's first congressional testimony on Tuesday, but failed to provide any fresh bullish impetus to the major. 

The pair, however, seemed unaffected by resurgent USD demand and was being weighed down by the news that the Bank of Japan, in its regular market operation, had bought slightly long-dated government bonds than it did at the last one. 

Traders also tracked the prevalent cautious sentiment tone around European equity markets, pointing to slight deterioration in investors’ appetite for riskier assets and which tends to benefit the Japanese Yen's safe-haven demand. Adding to this, weaker tone around the US Treasury bond yields further collaborated to the pair's downfall of over 50-pips from session tops. 

Moving ahead, today's US economic docket, featuring the release of the second estimate of the US Q4 GDP growth numbers, is likely to infuse some fresh volatility in the FX market and eventually provide some fresh impetus later during the early NA session.

Technical levels to watch

Weakness below the 107.00 handle is likely to find some support near the 106.75-70 region, which if broken is likely to accelerate the fall back towards the 106.10-106.00 support area. On the upside, 107.30 level now seems to act as an immediate hurdle, above which the pair could make a fresh attempt towards 107.75 supply zone en-route the 108.00 handle.