The USD/JPY pair now seems to have entered a bearish consolidation phase and was seen oscillating within 20-pips narrow trading range around the 111.00 handle.
Against the backdrop of political uncertainty stemming out of the upcoming UK general election and escalating geopolitical tensions in the Korean peninsula, renewed concerns over Greek bailout aggravated global risk aversion trade and boosted the Japanese Yen's safe-haven appeal.
However, a modest recovery in the European equity markets helped the pair to bounce off session lows, albeit retracing US treasury bond and a fresh wave of greenback selling interest further collaborated towards keeping a lid on the pair's recovery move.
In fact, the key US Dollar Index has now reversed majority of its early gains as traders now look forward to today's US macro data for some fresh impetus.
The US economic docket features the releases of Core PCE Price Index, Personal Income / Spending data and CB's Consumer Confidence Index for May.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: "Pair’s failure around 112.00 levels last week, followed by a break below 111.00 levels has established a falling top formation on the daily chart. The RSI has failed to get back above 50.00 (into bullish territory) and is now sloping downwards. The pair thus appears on track to test 110.23 (May 18 low) and 110.00 levels. A daily close below 110.00 would establish a falling bottom formation and shall open doors for a sell-off to 108.13 (Apr 17 low). On the higher side, only a daily close above 111.85 (falling channel resistance) would signal bearish invalidation."
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