USD/JPY pare losses, still weaker below 102.00 handle

Having posted a session low at 101.54, the USD/JPY pair has managed to recover some lost ground but still remained in bearish territory below 102.00 handle. 

Currently trading around 101.80-85 band, the pair continues with its struggle for a firm near-term direction and traded with negative bias within a broader trading range amid uncertainty over the additional BOJ monetary easing and timing of the next Fed rate-hike action. Both the major central banks are scheduled to announce their respective monetary policy decision on Wednesday. 

Meanwhile, a minor retracement in the greenback, as measured by the overall US Dollar Index, could also be attributed to the pair's bounce back from 5-day low touched during early European session on Tuesday. 

Traders would continue to readjust their positions heading into the big event risks, which might eventually lead to a further rise in volatility around the major. In the meantime, today's release of housing starts and building permits data from the US might provide some impetus for short-term traders. 

Technical outlook

Dukascopy Bank Team notes, “Overall, the USD/JPY currency pair has been trading in a down-trend for almost a year now, recently putting the descending channel's upper border to the test more frequently. With the resistance being strong, formed by the weekly and the monthly PPs, as well as the trend-line, the 20 and the 55-day SMAs, an upside development is unlikely. Instead, focus should be on the weekly S1 at 101.37, which is the only obstacle on the Greenback's path towards a tough support area around 100.60.”