USD/JPY in search of a firm direction, stuck in a range above mid-108.00s

• USD/JPY was seen oscillating in a narrow band and consolidated last week’s losses.
• US-China trade uncertainties continued underpinning the JPY’s safe-haven status.
• Investors now seemed reluctant ahead of the latest FOMC monetary policy update.

The USD/JPY pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the Asian session on Monday.

The pair remained confined in a narrow trading band around mid-108.00s on the first day of a new trading week and consolidated last week's losses. The safe-haven Japanese yen continued benefitting from worries about an escalation in the US-China trade war and failed to assist the pair to register any meaningful recovery.

In the latest trade-related development, top White House Economic Adviser Larry Kudlow confirmed on Friday that the December 15 deadline to impose the new tariffs on Chinese products remains in place and also added that the US President Donald Trump is pleased with the recent progress in trade negotiations.

Bulls, however, seemed rather unimpressed and also shrugged off Friday's upbeat US monthly jobs report, which showed that the economy added 266K jobs in November – the biggest gain in 10-month – and the unemployment rate unexpectedly ticked down to 3.5% – its lowest level in nearly half a century.

Meanwhile, the US dollar failed to capitalize on the previous session's post-NFP positive move and was being weighed down by a modest downtick in the US Treasury bond yields, which further collaborated to the pair's subdued/range-bound trading action on Monday.

The pair showed little reaction to an upward revision of Japan's GDP figures, which came in to show that the economic growth stood at 0.4% during the third quarter of 2019 as compared to 0.1% estimated originally and surpassing market expectations pointing to a reading of 0.2%.

It will now be interesting to see if the pair is able to gain some traction or traders prefer to stay on the sidelines ahead of the latest FOMC monetary policy update on Wednesday and absent relevant market moving economic releases from the US.

Technical levels to watch