USD/JPY consolidating near 118.00 handle, awaits Fed minutes

The USD/JPY pair caught fresh bids on Wednesday and moved back closer to multi-month peak. The pair, however, seems to have lost the upside momentum and has now retraced few pips from session high.

Currently hovering around 118.00 handle, a fresh leg of up-move in the US treasury bond yields is seen lending support to a renewed bid tone surrounding the major. Adding to this, the prevalent risk-on mood is further driving flows away from the Japanese Yen's safe-haven appeal and collaborating to the pair's up-move on Wednesday.

On Tuesday, the pair did make a move towards multi-month highs following the upbeat release of US ISM manufacturing PMI that showed factory activity accelerated to the highest level since December 2014. The pair, however, lost momentum and retreated back below 118.00 handle, primarily led by profit-taking. 

On Wednesday, the release of minutes of the December 13-14 Fed meeting would take centre stage during NY trading session and would be looked upon for reasons for stepping-up projections for rate-hikes in 2017. Today's FOMC meeting minutes would provide fresh impetus for the greenback's near-term trajectory and eventually determine the pair's next leg of directional move. 

Technical levels to watch

On a sustained move above session peak near 118.20 level, the pair is likely to make a fresh attempt towards retesting multi-month high resistance near 118.60-65 region before darting towards 119.00 round figure mark. On the downside, weakness below 117.80 level, leading to a subsequent drop below session low support near 117.55-50 area, is likely to drag the pair towards 117.20 support (yesterday's low) ahead of 117.00 round figure mark.