USD/JPY retreats back to 115.00 handle

The USD/JPY pair failed to build on to its bullish momentum and has now reversed around 45-pips from session peak to retrace back closer to 115.00 psychological mark.

A fresh bout of greenback selling pressure emerged during early NA session as investors turned cautious at the start of a two-day FOMC meeting, where the central bank is widely expected to raise its Federal-funds target rates by 25 bps. Moreover, given the pair's post-US election sharp up-surge of around 1500-pips to the highest level since Feb., traders also seemed inclined to lock-in some profits ahead of the big event risk. 

However, the prevalent upbeat sentiment surrounding equity markets and higher oil prices are indicative of the risk-on market mood and might limit flows towards the traditional safe-haven currency, Yen, and thus, should limit any immediate sharp downslide. 

Looking at the broader picture, the pair might be entering a consolidate phase, after its recent rally, and hence, any corrective slide might now be seen as an opportunity to initiate fresh long position. This would eventually indicate that the pair's upward trajectory has still more legs to come in the near-term.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "From a technical point of view, the 1 hour chart shows that the price is retreating towards the 115.00 region, with technical indicators having turned south and the RSI indicator already below its 50 level, indicating that the pair may extend its slide during the upcoming hours. In the 4 hours chart, the Momentum indicator heads sharply lower, barely holding above the 100 level, while the RSI indicator also turned south, but stands around 55. The weekly low was set at 114.73, with a break below it required to see the pair extending its slide down to the 114.00 region."