USD/JPY in search of a firm direction, confined in a range below 115.00 mark

The USD/JPY pair traded with bearish bias through European session on Monday and refreshed daily lows near mid-114.00s. 

The pair, however, lacked a firm direction and has now bounced from session low, reaffirming a broader 40-45 pips daily trading range. Traders seemed reluctant to initiate / carry big positions heading into the key event risk - the Fed monetary policy decision announcement on Wednesday. 

A modest greenback retracement, following Friday's dismal wage growth data, has been weighing on the major for the second straight session. However, a mildly positive trading sentiment around European equity markets, which tends to dent the Japanese Yen's safe-haven demand, coupled with disappointing Japanese economic data (Core Machinery Orders and Tertiary Industry Activity), have been lending support and seems to be collaborating towards limiting any sharp corrective slide for the major. 

With an empty US economic docket, investors' attention would remain glued to the FOMC monetary policy meeting and the accompanying rate-statement, where policymakers' updated economic projections would act as a catalyst for the pair's next leg of directional move.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet notes, "the rejection around 115.45 (0.618 Fib expansion) followed by a drop to 114.78 suggests the bullish move that begun from 111.69 (Feb 28 low) has run out of steam. Nevertheless, the last week’s bullish breakout from the sideways channel coupled with a bullish RSI indicates the sideways action is more likely to be followed by another leg higher. A daily close above 115.45 would open doors for 116.04 (Dec 30 low) and 116.62 (100% fib expansion)."

"Only two consecutive daily close below 113.56 would signal bullish invalidation. Meanwhile, trend reversal is seen below 111.50 levels."