USD/JPY eyeing to reclaim 111.00 handle ahead of FOMC minutes

The USD/JPY pair finally broke out of its Asian session consolidation phase and is now eyeing to reclaim the 111.00 handle ahead of today's key event risk.

The pair so far has held in positive territory since the beginning of this week and was seen building on its recovery move from last week's near four month lows. Easing geopolitical tensions between the US and N. Korea has been weighing on the Japanese Yen's safe-haven appeal and driving the pair higher.

Adding to this, yesterday's better-than-expected US retail sales data now seems to have revived hopes that the Fed would be able to stick to its plan for gradual monetary policy tightening, reinforced by rising US Treasury bond yields, further supported the pair's strong up-move back closer to monthly tops touched on August 4.

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Hence, the focus would remain on the minutes of the latest FOMC meeting, due for release later during the NY trading session. The minutes would be looked upon for clues over the timing of next rate hike action and details on the central bank's plans to reduce its massive balance sheet, which would eventually help investors to determine the pair's next leg of directional move.

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Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "An end of the day close today above 110.92 [38.2% Fib R of 114.49-108.71] if accompanied by a bullish break on the descending trend line on the yield curve chart could yield 111.58 [200-DMA] and 112.00 levels. On the downside, only a move below 109.84 [Aug 4 low] would revive the bearish trade."