USD/JPY consolidates in a range, just below 2-month tops

   •  Surging US bond yields/risk-on mood continue to extend some support.
   •  The prevalent USD selling bias keeps a lid on any attempted up-move.

The USD/JPY pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading band, just below two-month tops set earlier.

The pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the early European session on Wednesday. A combination of diverging forces failed to provide any fresh impetus and led to a range-bound/subdued price-action. 

The latest round of US tariffs on around $200 billion worth of Chinese imports fueled fears of rising inflationary pressure in the US economy and the expectations were reinforced by the ongoing upsurge in the US Treasury bond yields. 

In fact, yields on the benchmark 10-year bonds rose further beyond 3.0% mark to hit nine-year tops and was seen lending some support to the major. This coupled with a mildly positive tone around European equity markets dented the Japanese Yen's safe-haven status and further collaborated towards limiting any immediate downside. 

Despite the supporting factors, the pair struggled to gain any meaningful traction and was being capped by the prevalent US Dollar selling bias. Traders now look forward to the US housing market data, due later during the early North-American session, for immediate respite for the USD bulls and some fresh impetus. 

Technical levels to watch

Any follow-through up-move is likely to confront some resistance near the 112.80-85 supply zone ahead of the 113.00 handle. On the flip side, the 112.20-15 region now seems to protect the immediate downside and is closely followed by the 112.00 handle, which if broken might prompt some near-term long-unwinding pressure.