USD/JPY bulls trying to defend 107.00 handle

   •  Subdued USD demand fails to help build on yesterday’s strong up-move.
   •  Cautious mood underpins JPY’s safe-haven appeal and capping gains. 
   •  US CPI/FOMC meeting minutes might drive the pair in the near-term.

The USD/JPY pair traded with a mild negative bias through the Asian session on Wednesday and eroded a part of previous session's strong gains. 

The pair struggled to build on overnight strong gains and once again met with some fresh supply near the 107.40-50 region amid subdued US Dollar demand. Despite easing US-China trade war fears and Tuesday's hotter-than-expected US PPI print, the greenback failed to find any buyer and did little to provide any follow-through bullish impetus to the major.

This coupled with the prevalent cautious sentiment around Asian equity markets underpinned the Japanese Yen's safe-haven demand and further collaborated to the pair's modest retracement back to the 107.00 handle.

Meanwhile, the pair had a rather muted reaction to the BoJ Governor Haruhiko Kuroda's comments, reiterating to continue with easy monetary policies in order to achieve 2% inflation target, albeit helped limit further downside. 

Investors now gear up for the release of latest US consumer inflation figures, due later during the early NA session, which along with minutes from the last FOMC meeting would help determine the pair's near-term trajectory.

Ahead of the key releases, broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: “The pair could rise to 109.33 (descending 21-week MA) if the spot closes above 107.9 in a convincing manner.”

“Meanwhile, a downside break of the rising wedge would signal the corrective rally has ended. In such a scenario, the pair will likely target the recent low of 104.63,” he added further.