USD/JPY inter-markets: any up-move seems capped at 115.00 mark ahead of BoJ and the Fed

Following a weekly bearish gap opening, and a subsequent drop to session low near 114.26 level, the USD/JPY pair managed to recover some of its lost ground but remained capped below 50-day SMA hurdle. 

The recovery move came after a fresh wave of up-move in the US treasury bond yields, which helped the key US Dollar Index to reverse early losses and move positive territory for the day. The momentum, however, lacked conviction amid prevalent risk-off mood, as depicted by a rise in the Volatility Index (VIX), which tends to benefit the Japanese Yen's safe-haven appeal. Moreover, an up-tick in the Japanese 10-year treasury bond yields is also supportive of the bid tone around the Japanese Yen and collaborating towards restricting the major's recovery move. 

Meanwhile, investors also seemed to have turned cautious and refrain to initiate any fresh bets ahead of this week's key event risks - BoJ and the Fed monetary policy decisions. Investors would remain mindful of interest-rate differentials between Japan and the US and thus, a status-quo monetary policy decision should swing the pendulum in favor of the greenback, assisting the pair to move back above 115.00 psychological mark and resume with its prior appreciating trend.

After the initial reaction, further momentum, however, would remain dependent on the broader market risk sentiment and hence, the pair runs the risk of a sharp reversal in case of worsening investor risk-appetite, which remains at the mercy of Trump's protectionist stance.