USD/JPY bulls need to commit at this juncture

• USD/JPY bears are taking control at the start of the week.
• Attention will turn to the FOMC minutes on Wednesday. 

At the time of writing, USD/JPY is a little off on the day, losing some 0.1% and sub 111.00. The pair has sunk within a range of 111.19 and 110.79 so far.

The pair is consolidated in holiday this North American hours after posting the low during the London early afternoon as the greenback continued to fall.

The greenback is still reeling after last week's mixed bag of US labour data, Nonfarm Payrolls. 

While the headline beat forecasts by a relatively large margin, the Unemployment Rate ticked higher with the workforce Participation Rate didn't alter.

This has suggested to investors that while there are signs of positive progress, the inflation prospects that markets have priced in was not evident.

Therefore, markets presume that the Federal Reserve can afford to wait longer before tapering asset buying or hiking rates.

As a result, bonds rallied, stocks rose and the US dollar has turned soft, at least in the spot markets, in the wake of the data.

The next round of pointing data will indicate the market's response to the data.

However, according to the prior week ending 29 June, the CFTC data showed another squeeze on the short US dollar positioning.

This was likely related to the post-June FOMC adjustments where a hawkish re-repricing of the Fed’s rate prompted the bid.

Meanwhile, the yen, which was already deeply oversold, saw a large increase in net shorts (of more than 7% of open interest), with its current positioning being at -36% of open interest. 

Given that the US data is unlikely to prompt a hurry in the Fed's tapering, risk appetite would be expected to pick up and potentially keep the yen hamstrung. 

'' How the JPY performs in the coming weeks vs the USD will depend on how the Fed communicates its monetary policy,'' analysts at Rabobank argued. 

In this regard, the Federal Open Market Committee minutes will be released Wednesday where the tapering discussions official began at the meeting. 

The minutes may shed some light on what the likely timetable will be. 

Regarding tapering, the Federal reserve's chairman, Jerome Powell, said this was a  “talking about talking about” meeting.

To markets, this means that the debate seems to be intensifying and an emphasis on data will likely be the key until the next meeting between July 27-28.

President and CEO of the Federal Reserve Bank of Atlanta, Raphael Bostic, on Wednesday is the only speaker scheduled this week.

USD/JPY technical analysis

110.80 is a key support level and would be expected to hold, resulting in the next wave of buying in order to send the pair on its way to fresh cycle highs in a new bullish daily impulse.