USD/JPY confined in tight range ahead of Fed minutes

The USD/JPY pair held on to its tepid recovery gains above 100-day SMA but has been confined within a narrow trading band near the top end of daily range. 

Currently hovering closer to session peak around 103.60-65 band, a broadly based greenback strength has been the sole driver of the pair's recovery from session low level of 103.28 touched during early Asian session led by a sharp recovery in the GBP/USD major.

However, the US Dollar caught fresh bids at lower level amid increasing odds of the Federal Reserve moving towards raising interest rates by the end of this year. Meanwhile, the prevalent cautious sentiment around European equity market is supporting the Japanese Yen's safe-haven appeal and restricted further momentum.

Looking ahead, today's release of minutes from the Fed's latest monetary policy meeting in September would turn out to be a key driver of the pair's next leg of momentum. In the meantime, speeches from couple of FOMC members might also provide some impetus during early NA trading session on Wednesday. 

Technical outlook

John Benjamin, Analyst at Orbex, notes, "USD/JPY closed with a doji after another attempt to breakout above 104.00 was met by strong selling. Still, the dollar managed to close nearly flat against the yen, resulting in a doji near the resistance level. A lower close today could be seen as a bearish signal as we continue to wait for a pull back in USDJPY. On the 4-hour chart, as noted in yesterday's commentary, price action reversed near 104.00 forming a lower high with a break out from the rising median line that followed. Prices remain consolidating near 103.70 - 103.50 resistance level, and we could expect near term weakness to 103.00. A break below 103.00 support level is needed to ascertain the declines towards 102.00 followed by 101.75 - 101.61."