USD/JPY enters a bearish consolidation phase near 4-week lows

   •  US political jitters prompt fresh selling.
   •  JPY get an additional boost from deteriorating risk appetite. 
   •  US housing market data might provide some impetus.

The USD/JPY pair maintained its offered tone through the mid-European session and now seems to have entered a consolidation phase near mid-112.00s, or 4-week lows.

Against the backdrop of the ongoing uncertainty over the fate of a major US tax reform plan, the latest development over the investigation into Russian interference in the 2016 US Presidential election prompted some fresh selling pressure around the US Dollar on Friday.

As reported by the Wall Street Journal, the special counsel Robert Mueller had issued a subpoena to more than a dozen officials from Donald Trump's campaign for documents related to Russia.

Adding to this, a slight deterioration in investors' risk appetite, as depicted by the prevalent cautious sentiment around European equity markets, remained supportive for the Japanese Yen's safe-haven appeal and further collaborated to the pair's weaker tone on the last trading day of the week.

Later during the NA session, the US housing market data - housing starts and building permits, would now be looked upon for some immediate respite for the USD bulls and short-term trading opportunities.

   •  US: Expect a decent rebound of 1.9% m-o-m in October housing starts - Nomura

Technical levels to watch

A follow-through selling pressure has the potential to continue dragging the pair towards 112.20 horizontal support ahead of the 112.00 handle.

On the upside, recovery back above the 112.65 area (50-day SMA) could get extended towards 112.85 level, but any subsequent up-move might now be capped at the 113.00 handle.