USD/JPY stays in red below 114 as DXY loses momentum ahead of Powell speech

• US Dollar Index steadies near mid-95s.
• Consumer confidence in Japan improves slightly in September.
• Coming up in NA session: ISM NY Business Conditions Index and FOMC Chairman Powell speech.

The USD/JPY pair failed to extends its march north above the 114 mark on Tuesday and is now recording modest losses on the day as investors wait for the  macroeconomic data releases from the United States and the FOMC Chairman Powell’s speech. As of writing, the pair was trading at 113.80, losing 0.1% on a daily basis.

Although the greenback was able to preserve its bullish momentum for the fourth straight day on Tuesday, the lack of risk-appetite allowed the safe-haven JPY to gather strength against the buck. With investors staying focused on concerns over Italy’s  budget deficit target, major European indices look to close the day in the red to reflect the risk-off mood. At the moment, Germany’s DAX is losing 0.63% while the UK’s FTSE is down 0.3% on the day.  

Later in the session, the ISM NY will publish its Business Conditions Index. Furthermore,  Randal Quarles, Federal Reserve board member and Vice Chair for Supervision, and FOMC Chairman Jerome Powell are scheduled to deliver speeches. The US Dollar Index, which tracks the greenback against a basket of six major currencies, was last seen adding 0.25% on the day at 95.55.

On the other hand,   the data released by Japan’s Cabinet Office during the Asian session showed that the Consumer Confidence Index ticked up to 43.4 in September from 43.3 to beat the market expectation of 43.

Technical levels to consider

On the upside, with a decisive break above 114 (daily high) the pair could target 114.70 (Nov. 6, 2017, high) and 115 (psychological level). On the downside, supports could be seen at 113.60 (daily low), 112.55 (20-DMA) and 111.60 (50-DMA).