USD/JPY in a phase of bullish consolidation, awaits US data

Having posted fresh two-month tops of 111.66 in the overnight trades, the USD/JPY pair has entered a phase of consolidation, as the bulls await the next catalysts in the US dataflow for fresh impetus.

USD/JPY back below 200-DMA of 111.50

The spot stalled its bullish run and now gathers pace for further upside, as renewed weakness in Treasury yields restrict further gains in USD/JPY. The US rates weakened across the curve amid the latest reports of the US military spending backed by the Senate, which is believed to trigger a battle over government spending levels later this year.

However, the bulls continue to fight for control on the back of a sharp rally seen in the Japanese stocks. The Nikkei 225 index surged to fresh two-month tops, as the Japanese traders returned to markets and played a catch-up with the global equities.

Later today, the sentiment on the global equities combined with a fresh batch of US macro data will play a key role in driving the prices, as investors prepare for the FOMC and BOJ policy decision due later this week.

USD/JPY Technical levels                 

To the topside, a daily close above 111.50 (200-DMA) would shift risk in favor of a re-test of 111.73 (July 27 high) beyond which 112 (round number) would be back on sight. A break below 111.14 (daily pivot) would open doors for 110.86/83 (5 & 100-DMA). A break lower would yield a test of 110.50 (psychological levels).