USD/JPY stays directionless in narrow band below 112

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  • OCED cuts global growth forecasts for 2019 and 2020.
  • European equity indices trade mixed for the second straight day.
  • US Dollar Index clings to small gains below 97.

After failing to make a daily-close above the 112 mark yesterday for the fourth time since the start of the month, the USD/JPY is now having a difficult time setting its next short-term direction. As of writing, the pair was virtually unchanged on the day at 111.87.

Although the Organisation for Economic Co-operation and Development (OECD) today announced that it cut its global economic growth forecast down to 3.3% in 2019 from 3.5% reported in November’s publication, there was no negative market reaction that could ramp up the demand for safe-havens such as the JPY. Reflecting the neutral sentiment, European equity indexes trade mixed with Germany’s DAX losing 0.2% and the UK’s FTSE adding 0.12%.

On the other hand, the US Dollar Index is struggling to gather strength after finding resistance around the 97 mark yesterday. In the NA session on Wednesday, the ADP’s private sector employment report and December trade balance data will be looked upon for fresh impetus. Moreover, markets will be paying close attention to the Fed’s Beige Book for fresh clues on the economic slowdown in early 2019.

Technical levels to consider

On the upside, 112 (psychological level/Mar. 5 high) remains as the first resistance ahead of 112.60 (Dec. 20, 2018, high) and 113.35 (Dec. 10, 2018, high). On the other hand, supports could be seen at 111.50 (200-DMA), 111 (100-DMA) and 110.35 (Feb. 27 low).

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