USD/JPY consolidates near 1-1/2 month tops, comfortably above 108.00 handle

The USD/JPY pair now seems to have entered a consolidation phase and was seen oscillating in a range just below 1-1/2 month tops, set earlier this Tuesday.
 
Despite the latest escalation of geopolitical tensions in the Middle East, following drone attacks on oil fields in Saudi Arabia, the pair on Monday witnessed a dramatic intraday turnaround and rallied around 70-pips from an early low to levels just below mid-107.00s.

The upside seems capped ahead of FOMC/BoJ

The overnight goodish move up was solely driven by resurgent US Dollar demand and the momentum extended through the early Asian session on Tuesday, albeit investors' reluctance to place aggressive bets ahead of the key central bank meetings capped further gains.
 
Meanwhile, the fact that surging Oil prices might have raised fears of a global economic slowdown now seemed to underpin the Japanese Yen's safe-haven demand and further collaborated towards keeping a lid on any strong follow-through appreciating move for the major.
 
However, the fact that the pair has found acceptance above 100-day SMA for the first time since early-May support prospects for an extension of the recent bullish trajectory, though investors are likely to wait for a fresh catalyst from the highly anticipated FOMC decision.
 
The Fed is widely expected to cut interest rates again at the conclusion of a two-day meeting on Wednesday but opinions on further easing remain divided. This will be followed by the latest BoJ monetary policy update on Thursday, which might further contribute towards determining the pair's next leg of a directional move.
 
In the meantime, the broader market risk sentiment and the USD price dynamics might continue to influence the price action and contribute towards producing some short-term trading opportunities amid absent relevant market-moving US economic releases on Tuesday.

Technical levels to watch