USD/JPY trims strong gains to 10-month peak

After surging through 116.00 handle to hit a 10-month high, the USD/JPY pair witnessed a profit taking slide and has now reversed majority of its daily gains.

Currently trading around mid-115.00s, the prevalent cautious sentiment in equity market is seen extending some support to the Japanese Yen's safe-haven appeal. Moreover, a broad based US Dollar retracement, as investors prepared for Wednesday's much-awaited Fed monetary policy decision, also seems to be contributing to the pair's profit taking slide from the highest level since Feb. 8.

Investors, this week, will remain focused on the FOMC meeting starting Tuesday and firming expectations of interest rate-hike might continue to underpin the greenback. Adding to this, anticipated faster US economic growth and inflationary pressure, in wake of aggressive fiscal stimulus by Trump administration, has been fueling speculations tighter Fed monetary policy stance in 2017 and might now limit any immediate sharp downslide for the major. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "In the 4 hours chart, the RSI indicator pulls back from overbought territory, while the Momentum holds flat well into positive territory, supporting the case for a downward correction. This Monday's low stands at 115.15, the immediate support and the level to break to confirm additional declines towards 114.00, the 23.6% retracement of the 2011/15 rally."