USD/JPY keeps the red near one-week lows, US data eyed

   •  USD selling abates but fails to provide any boost.
   •  Bears seemed to be tracking weaker US bond yields.
   •  Second-tier US economic data eyed for fresh impetus.

The USD/JPY pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading range around the 106.00 handle.

The US Dollar selling, led by the US President Donald Trump's plan to impose tariffs on Chinese imports, now seems to have abated but the pair seemed to track weakness in the US Treasury bond yields. 

The incoming US economic data has been pointing to no significant pick-up in inflation and might have dampened expectations over a steep Fed monetary policy tightening cycle, which is evident from the recent slide in the bond yields. 

A combination of negative facts kept exerting downward pressure on the major, which has now reversed around 150-pips from Tuesday's 2-week high near the 107.30 area. 

Traders now look forward to the US economic docket, featuring the second-tier releases of regional manufacturing indices and the usual initial weekly jobless claims, in order to grab some short-term trading opportunities.

Technical levels to watch

Any subsequent weakness is likely to get extended towards 105.50-40 support area, below which the pair seems vulnerable to test the key 105.00 psychological mark.

On the upside, any meaningful recovery attempt is likely to confront fresh supply near the 106.30-35 region, which if cleared might trigger a short-covering bounce towards the 106.90-107.00 area.