USD/JPY lacks any strong follow through momentum, up little around 109.65

The USD/JPY pair now seems to have entered a bearish consolidation phase and seesawed between tepid gains/minor losses below the key 110.00 psychological mark.

The pair on Wednesday plunged below the 109.00 handle, the lowest level since April 21, after a duo of US economic reports - inflation and retail sales data, added to the recent slew of data disappointment and raised concerns over a slowdown in the US economy.

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Meanwhile, the Fed decision to raise interest rates by 25 basis points and maintained its view for three rate-hikes in 2017, accompanied with a confirmation to start trimming its $4.5 trillion massive balance sheet, helped the pair to rebound sharply from lower levels. 

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The pair, however, struggled to extend previous session's recovery move from nearly two-month lows, touched in the aftermath of dismal US macro data, and oscillated within 50-60 pips broader trading range amid subdued greenback price action.

Adding to this, a mildly cautious sentiment around equity markets further supported the Japanese Yen’s safe-haven appeal and seems to have kept a lid on the pair’s recovery move.

Moreover, investors also seemed reluctant to carry/initiate fresh positions ahead of the BoJ monetary policy decision, due to be announced during Asian session on Friday.

Later during the NA session, the US economic docket, featuring the release of manufacturing data and usual weekly unemployment claims, would be looked upon for some short-term trading impetus.

Technical levels to watch

Currently trading around 109.70 region, immediate resistance is pegged near 109.90 level, above which the pair is likely to accelerate the up-move towards 110.30-35 resistance area en-route its next major hurdle near 110.70-75 region.

On the flip side, weakness below mid-109.00s is likely to find some support near 109.25-15 zone, which if broken would turn the pair vulnerable to extend its downward trajectory towards 108.40 horizontal support.