USD/JPY consolidates in a range, around mid-106.00s

   •  Fading Fed rate hike expectations/US political news keeps USD on the back-foot.
   •  Fears of a global trade war revive on Trump’s plan to impose tariffs on China.

The USD/JPY pair stalled overnight sharp retracement slide from near two-week tops and was now seen consolidating in a range, around mid-106.00s.

Renewed US Dollar selling pressure remained unabated through the Asian session on Wednesday and was being further weighed down by the US President Donald Trump's plans to impose tariffs on China. 

Against the backdrop of fading expectations over a steep Fed monetary policy tightening cycle, coupled with news of Rex Tillerson's ouster as the US Secretary of State, reviving global trade war fears continued exerting downward pressure on the greenback and failed to lend any support to the major.

Despite the negative factors, the pair has managed to hold within previous session's broader trading range as investors now look forward to a fresh batch of US economic data - monthly retail sales and the latest PPI figures, for some fresh impetus.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes, “yesterday's retreat from 107.29 to 106.30 has put pressure back on the bulls. A negative follow-through (preferably a close below 106.25) would signal the rally from 105.25 (March 2 low) has ended at 107.29 (yesterday's high) and could yield a re-test of 105.25 - 105.00.”

“The pullback from 107.29 to 106.30 is discouraging, however, the descending trendline support (former resistance breached on March 9) is still intact. Further, the bullish crossover between the 5-day moving average (MA) and the 10-day MA indicates a short-term bullish setup. Meanwhile, on the 4-hour chart, 50-MA and 100-MA have shed bearish bias (bottomed out)”, he adds further.