USD/JPY struggling for a firm direction, stuck below 111.00 handle

The USD/JPY pair struggled for a firm direction and seesawed between tepid gains and minor losses before stabilizing in neutral territory ahead of US economic releases.

Currently hovering around yesterday's closing level, 110.80-85 region, the pair initially jumped to session peak level of 111.24 before retracing back below 111.00 handle and reaffirmed near-term consolidation phase just below Monday's multi-month high level of 111.34. The prevalent upbeat sentiment around European equity markets is denting the Japanese Yen's safe-haven asset and extending some support to the major, which otherwise could have built on Monday's pull-back from the highest level since late May.

Mixed greenback performance, as measured by the overall US Dollar Index, has failed to provide any impetus and the major remains in near-term consolidative phase following a vertical up-surge of over 1000-pips in past couple of weeks. 

Next on tap would be second-tier US economic releases that include - existing home sales and Richmond manufacturing index, which might provide some short-term trading opportunities ahead of Wednesday's durable goods orders and FOMC meeting minutes. Minutes from the Fed's latest monetary policy meeting would be looked upon for reinforcement of December Fed rate-hike expectations and trigger a fresh leg of directional move for the pair ahead of next week's keenly watched, NFP data. 

Technical outlook

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd., notes, "Strong bullish signals (daily Tenkan-sen in steep ascend/double Golden-cross of daily 10/200 & 20/200 SMA’s) are supportive for further extension of strong rally after US elections. The pair is eyeing next strong barrier at 112.12 (base of falling weekly cloud), penetration of which will generate another bullish signal."

"However, caution on extremely overbought daily studies and yesterday’s Doji that could be seen as initial signs of possible recovery stall. Watch today’s close for clearer signals. Good supports and first downside triggers lay at 110.25/00 and sustained break here would signal further easing."

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