USD/JPY turns flat at 101.25, struggling for direction

The USD/JPY pair has a muted reaction to a disappointing second-quarter Japanese GDP and an upward revision to industrial production for June and remained confined within a narrow trading range amid low volatility in global financial markets.

Currently trading at 101.25, up with only marginal gains, the pair had recovered from early opening low of 101.12 and touched an intraday high of 101.45. 

In absence of any major economic releases, the pair is likely to derive its move from the prevalent sentiment surrounding the greenback, which is driven solely on expectations of the Fed rate-hike prospects in 2016.

This week's US economic data would further assist investors to evaluate the possibilities of an eventual Fed rate hike action, while key event risk would be minutes from the Federal Reserve's latest monetary policy meeting. 

Technical levels to watch

On the downside, 101.00-100.80 area might continue to act strong support, which if broken decisively should open room for an immediate drop towards testing the very important 100.00 psychological mark support. Alternatively, a sustained recovery move above 101.50 level is likely to get extended towards 101.90-102.00 region, above which the momentum seems to lift the pair back towards 102.40-50 strong resistance.