USD/JPY sits at session tops, just below 111.00 handle ahead of FOMC minutes

The USD/JPY pair trimmed some of the early gains, closer to monthly highs, and retreated around 20-pips from session top folllowing dismal US housing market data. 

The US Dollar lost its upside momentum during early NA session on Wednesday and was being weighed down by a big disappointment from today's US housing market data. According to the Commerce Department, housing starts fell 4.8% from June and came in at an annualized pace of 1.155 million units for July. Adding to this, building permits slipped 4.1% in July to a seasonally adjusted annual pace of 1.223 million units. 

   •  US: Privately-owned housing starts in July were at 1,155,000

The post-US data dip, however, turned out to be short-lived, with the pair jumping back session tops, in the vicinity of 111.00 round figure mark, amid prevalent risk-on environment, which was seen denting the Japanese Yen's safe-haven appeal.

Moreover, investors also refrained from placing aggressive USD bearish bets ahead of the much-awaited FOMC meeting minutes and helped the pair to hold in positive territory for the third consecutive session

The market focus would remain on clues over the timing of next Fed rate hike action and details over the central bank's plans to start reducing its massive balance sheet, which would help determine the pair's near-term trajectory.

   •  FOMC minutes in the limelight – Danske Bank

Technical levels to watch

On a sustained break through the 111.00 handle, the pair is likely to accelerate the up-move towards 111.25 horizontal resistance en-route 111.75-80 strong supply zone and the 112.00 handle. On the downside, 110.70 level now seems to protect the immediate downside, which if broken would turn the pair vulnerable to head back towards retesting the key 110.00 psychological mark.