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  • USD/JPY remains confined in a narrow trading band below mid-109.00s.
  • The near-term technical set-up seems tilted in favour of bullish traders.

The USD/JPY pair extended its sideways consolidative trading range through the mid-European session on Tuesday. The pair remained confined in a narrow trading band just below mid-109.00s and has been pivoting around 100-hour EMA.

The recent range-bound trading action seemed to have constituted towards the formation of a rectangle on hourly charts. A rectangle is considered a continuation pattern that forms as a trading range during a pause in the trend.  

Given the pair’s positive move from multi-year lows set in August, the bias  seems tilted in favour of bulls. This coupled with acceptance above the very important 200-day SMA further add credence to the constructive outlook.

Bullish oscillators on the daily chart also support prospects for a further near-term appreciating move. Traders, however, are likely to wait for a sustained move beyond the 109.70-75 region before placing fresh bullish bets.

Above the mentioned hurdle, the pair is likely to surpass the key 110.00 psychological mark and aim towards testing its next hurdle near the 110.45-50 supply zone.

On the flip side, any meaningful pullback is likely to show resilience below the 109.00 handle and might still be seen as a buying opportunity. Failure to defend the said support might turn the pair vulnerable to accelerate the slide further towards the 108.50-45 horizontal support.

USD/JPY 1-hourly chart