USD/JPY slips into negative territory

The USD/JPY pair once again failed to retain its strength above 118.00 handle for the second consecutive day and has now erased daily gains to drift into negative territory. 

Currently trading around 117.60 region, testing session lows, a mild cautious mood around European equity markets is pointing to slight deterioration in investors risk appetite and lending some support to the Japanese Yen's safe-haven appeal. Moreover, retracing US Treasury bond yields across the board is also seen weighing on the US Dollar and contributing to the pair's retracement from session peak. 

From technical perspective, the pair has repeated failed to witness a follow through action beyond 118.00 handle. However, the recent corrective slide turned out to be short-lived, clearly suggesting that the pair might have entered a near-term consolidation phase. 

Hence, focus would remain on this week's important US macro releases, including the key monthly jobs report, which would help investors determine the next leg of directional move for the major. 

With the scheduled release of minutes from the December policy meeting, when the central bank finally decided to hike rates for the first time in 12-months, the Fed would be back on center on Wednesday. The minutes would be looked upon for fresh insight over the Fed's monetary policy outlook and should provide fresh impetus or the greenback's well-established strong up-trend. 

Technical levels to watch

A follow through retracement below 117.50 immediate support is likely to accelerate the slide towards 117.20 intermediate support ahead of 117.00 round figure mark. On the upside, 118.00 handle now seems to have emerged as immediate hurdle and on a sustained move back above this important resistance, the pair could make a fresh attempt to head back towards multi-month highs resistance near 118.60-65 region.