USD/JPY bounces off lows, still in red below mid-112.00s

   •  The USD bulls remain on the defensive amid uncertainty over the Fed’s rate hike path.
   •  Global growth concerns further underpin JPY’s safe-haven demand and exert pressure.
   •  The latest monetary policy updates by the FOMC and BoJ eyed for a fresh directional impetus.

The USD/JPY pair has managed to recover a major part of the early decline to seven-week lows, albeit held on to its weaker tone through the early European session.

The pair struggled to build on the overnight late rebound and remained under some selling pressure for the fourth consecutive session amid the prevalent US Dollar selling bias. Uncertainty over the Fed's rate hike path in 2019 kept the USD bulls on the defensive and was seen exerting some downward pressure on the major. 

Meanwhile, an overnight plunge in crude oil prices underscored dimming prospects for the global economy, which provided an additional boost to the Japanese Yen's perceived safe-haven status and further collaborated to the pair's slide to the lowest level since late-October. 

Bulls, however, continued showing some resilience below 100-day SMA important support amid nervousness ahead of the impending FOMC policy decision, due to be announced later in the day. The Fed is widely expected to raise benchmark interest rates by 25 bps and hence, the key focus will be on the accompanying rate statement, especially updated economic projections. 

The so-called 'dot-plot' will provide clues over the Fed's policy guidance for 2019 and play a key role in driving the near-term sentiment surrounding the buck. This followed by the latest BoJ monetary policy update on Thursday will eventually help investors determine the pair's next leg of a directional move. 

Technical outlook

Valeria Bednarik, FXStreet's own American Chief Analyst writes, “the pair trades a handful of pips above its 100 DMA, having held above it since last August. Additionally, the pair has bounced several times from the 112.20/30 price zone these last couple of months, making of the level more relevant support that if broken, could result in a steeper decline.”