USD/JPY eases from tops, still holding above 106.00 handle

   •  Renewed USD selling pressure fails to assist in building early up-move.
   •  Risk-off mood benefits JPY’s safe-haven appeal and capping further.
   •  Focus remains on Wednesday’s key FOMC decision and ‘dot plot’.

The USD/JPY pair trimmed some of its early gains and retreated around 20-pips from session tops, albeit has managed to hold just above the 106.00 handle.

The pair reversed an early dip to 105.68 level and touched an intraday high level of 106.31, supported by a goodish pickup in the US Treasury bond yields. The up-move, however, quickly ran out of steam and was being capped by some renewed US Dollar selling bias.

This coupled with heavy selling pressure in the US equity markets provided an additional boost to the Japanese Yen's safe-haven appeal and further collaborated to the pair's retracement from higher levels.

Despite a pull-back, the pair has managed to defend the 106.00 handle as traders now seemed reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the next big event risk - the highly anticipated FOMC monetary policy decision, due to be announced on Wednesday.

In absence of any major market moving economic releases, the USD price dynamics and the broader market risk sentiment might continue to act as key determinants of the pair's momentum on the first trading day of the week. 

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: “Technically, the bounce is little significant in terms of trend as in the longer view it retains a bearish stance. In the 4 hours chart and for the short term, the pair is neutral, developing below its 100 SMA, which offers an immediate resistance around 106.25, while technical indicators recovered some ground, but currently hold within neutral territory. Should the pair break above the mentioned MA with strength, there's scope for an approach to the 107.00 level, where selling interest will likely re-surge.”