USD/JPY: consolidates the bearish correction below key resistance

• USD/JPY: temporary relief for bears?
• USD/JPY to head back to 107 territories?

Between a European range of 106.35-106.97, USD/JPY was entering NY -0.22%, and is consolidating in the NY session so far.  Currently, USD/JPY is trading at 106.54, down -0.26% on the day, having posted a daily high at 106.99 and low at 106.36.

While markets are buoyed on the prospect of a summit between North Korea and the United States, the threat of a trade and investor concerns seem to have abated, (equities gapping higher end of last week (Dow still above 25,000)), pressuring the yen this month, there is some immediate pressure on the dollar due to last week's wages miss.  

Overall, the dollar is mixed against the majors as the new week gets underway although there is a light calendar for the yen and the Fed blackout period has commenced. However, Japan’s weekly portfolio flows reported by the MOF may draw more attention than usual, as analysts at Brown Brothers Harriman pointed out:  

"It is not unusual for Japanese investors to repatriate some of their overseas investments around the turn of the fiscal year.  However, what should not be lost in the seasonality were the comments by the head of the Government Pension Investment Fund (GPIF) suggesting that the recent price action has made US bonds more attractive.  Recall that previously the cost of hedging was prohibitive.  More interesting than the largest weekly bond sales by Japanese investors in several years, foreign investors stepped up their purchases of Japanese bonds."

Three Fed hikes this year?

Elsewhere, markets will continue to mark up the likelihood of a Fed hike this month and another two rate hikes before the year is out given how confident that the Fed speakers have been on their assessments of the US economy that is, in their opinions, on track toward achieving its dual mandate.
  
"Fed Chief Powell offered the imagery that captures what appears to be the consensus at the central bank.  What were headwinds have become tailwinds. The dollar is not appreciating, and global growth is the best in at least a decade.  Oil prices have risen. Fiscal policy is stimulative. This means that the high-frequency economic data in the coming days may spur reactions to the headlines but are unlikely to alter expectations for Fed policy. This seems likely to be the case despite the fact that the US economic reports are top shelf:  CPI, retail sales, and industrial output," the analysts at Brown Brothers argued.

USD/JPY levels

The price is back below the 21-D SMA (106.75) and if bulls are to get back in charge, the price needs to get through JPY107.20 and break this upper end of the range near JPY108. Further out, 110.85 is key ahead of and 111.44/50 as being a double Fibonacci retracement that is lining up with a lower and descending 200-D SMA at 111.30. On the flipside and below the 105.50 level, 104.80 opens up territory with little chart support towards 100.70/99.00 on the charts.