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  • The USD/JPY pair trades in a 35-pip range on Monday.
  • US Dollar Index drops below 94.50 in the NA session.
  • Wall Street fails to stay in the positive territory.

The USD/JPY pair is having a difficult time setting its next short-term direction on Monday amid a subdued trading action surrounding the FX markets. After advancing to mid-112 during the first half of the day, the USD/JPY pair lacked a follow-through as this move looked more technical  rather than a fundamental. In the NA session, the pair dropped to the lower half of its daily range and was last seen trading at 112.23, where it was down 0.13% on the day.

The macroeconomic data from the U.S. on Monday showed that retail sales rose by 0.5% to come in line with the general expectation and the NY Fed’s Empire State Manufacturing survey’s headline activity index eased to 22.6 in July from 25 to surpass the experts’ estimate of 22. The US Dollar Index, however, didn’t show a noteworthy reaction to the data and remained in the negative territory. At the moment, the index is down 0.15% on the day at 94.30.

Meanwhile, major equity indexes in the United States started the day on a mixed tone. Although they were able to rise slightly during the first couple of hours of the session, the momentum failed to build up as energy shares suffer heavy losses on sharply falling crude oil prices. As of writing, the Dow Jones Industrial Average was flat on the day while the S&P 500 was down 0.13%.

There won’t be any other macroeconomic data releases in the remainder of the day and the pair is likely to extend its choppy  action into the Asian session.

Technical levels to consider

The initial support for the pair could be seen at 112.15 (Jul. 15 low) ahead of 111 (20-DMA/psychological level) and 110.35 (Jul. 9 low). On the upside, resistances align at 112.80 (Jul. 13 high), 113.40 (Jan. 8 high) and 113.75 (Dec. 12 high).