- US Dollar Index drops below 94 in the early NA session.
- Wall Street starts the day lower.
- Coming up: Dallas Fed Manufacturing Index.
The USD/JPY pair is having a tough time determining its next short-term direction on Monday and was last seen trading at 112.60, where it was virtually unchanged on the day.
The strong performance of European currencies, especially the euro on the back of hawkish comments from ECB President Draghi, weighed on the demand for the dollar today and dragged the US Dollar Index below the 94 handle. After touching a fresh session low at 93.84, the index started to retrace its losses and was last seen down 0.25% on the day at 94. The only data from the U.S. on Monday showed that the Chicago Fed’s National Activity Index stayed unchanged at 0.18 in August to beat the analysts’ estimate of 0.02.
Despite the modest recovery seen in the greenback in the last hour, the weak risk-appetite seems to be helping the safe-haven JPY stay resilient. Major equity indexes in the U.S. opened lower, and the Dow Jones Industrial Average and the S&P 500 were last seen losing 0.45% and 0.25% respectively to reflect the risk-off mood.
Later in the session, the Federal Reserve Bank of Dallas will publish the Manufacturing Index, which is expected to improve slightly to 31 in September from 30.9 in August.
Technical levels to consider
The initial resistance for the pair could be seen at 112.70 (daily high) ahead of 113.15 (Sep. 19 high) and 114 (psychological level). On the downside, supports are located at 112.40 (daily low), 112 (psychological level/Sep. 20 low) and 111.30 (50-DMA).
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