USD/JPY up little, around 112.60 level

   •  Remains confined in a narrow range amid lacklustre trading action.
   •  US bond yields provide a minor boost while reviving safe-haven demand capping gains. 
   •  US tax bill vote eyed ahead of Thursday’s BOJ decision.

The USD/JPY pair built on overnight modest rebound from the 112.30 support area and is currently placed near the top end of its daily trading range. 

Despite persistent US Dollar selling bias, the pair managed to gain some positive traction on Tuesday but still seemed lacking any firm directional bias. A modest pickup in the US Treasury bond yields, especially shorter end of the yield curve, seems to have provided a minor boost. 

However, the prevalent cautious sentiment around European equities, which tends to benefit the Japanese Yen's safe-haven appeal, might now contribute towards keeping a lid on any strong up-move.

With the House and the Senate close to passing the Republican tax bill, investors might also refrain from placing aggressive bets ahead of the BOJ meeting on Thursday and might eventually keep the pair restricted within a broader trading range.

Technical levels to watch

Immediate resistance is pegged near 112.70-80 area, above which the pair is likely to surpass the 113.00 handle and aim towards testing 113.50-55 supply zone. On the flip side, 112.30 level now seems to have emerged as immediate support, which if broken now seems to drag the pair even below the 112.00 handle towards testing the very important 200-day SMA support near the 111.60 region.