- USD/JPY struggles to find direction on Monday.
- European stocks trade mixed.
- Subdued trading action is likely to continue.
After closing the previous week with a modest 40-pip gain, the USD/JPY started the new week in a calm manner and is having a difficult time determining its next short-term direction. At the moment, the pair is virtually unchanged on a daily basis at 111.47.
Earlier today, the data from Japan showed that the merchandise trade balance (adjusted) rose to +116.1 billion JPY from -254 billion JPY but the fact that imports declined 6.7% in the same period on a yearly basis didn’t allow the market to show a positive reaction. Other data from Japan revealed that industrial production contracted by 3.4% on a monthly basis in January.
On the other hand, ahead of the NA session, which won’t offer any significant macroeconomic data releases from the U.S., the US Dollar Index is posting small losses below 96.50. Later this week, the FOMC’s policy announcements and the updated dot plot chart will the primary catalyst for the greenback.
Meanwhile, European stocks are not providing any clues regarding the markets’ risk perception on Monday with the Euro Stoxx clinging to small gains and Germany’s DAX posting small losses. Similarly, the S&P 500 Futures is trading flat on the day to suggest that Wall Street is likely to start the day near last week’s closing levels.
Technical levels to consider
The initial resistance for the pair aligns at 111.50 (200-DMA) ahead of 112 (psychological level) and 112.30 (200-WMA). On the downside, supports could be seen at 111.35 (20-DMA), 110.85 (100-DMA) and 110.50 (50-DMA).
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