USD/JPY consolidating in a tight range above 114.00 handle

The USD/JPY pair was seen consolidating recent gains to near two-month highs and seesawed between tepid gains / minor losses within a narrow trading band above the 114.00 handle.

Currently trading around 114.20 region, growing prospects of an eventual Fed rate-hike action helped the pair to shrug-off concerns over the US President Donald Trump's abrupt firing of FBI Director James Comey. 

Moreover, suppressed market volatility, with the CBOE Volatility Index (VIX) meandering near its lowest level in over two-decades, clearly points to improving investors' appetite for riskier assets and has been denting demand for traditional safe-haven assets, including the Japanese Yen, eventually collaborating to the pair's strong up-move to the highest level since mid-March.

Hence, today's subdued price-action seems merely a consolidative phase, amid slightly near-term overbought conditions, as investors' focus shifts to BoE Super Thursday, which should act as a fresh catalyst for market volatility and for the major.

Later during the day, the US macro data that includes - PPI and weekly unemployment claims, would also be looked upon for short-term trading impetus.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "The pair remains capped by a strong static Fibonacci resistance at 114.50, but is technically bullish after bouncing form 113.60, and with 4 hours indicators gyrating strongly higher within positive territory. In the same chart, the 100 SMA has extended its advance above the 200 SMA, both far below the current level, but reflecting the ongoing sentiment towards the pair."