- US Dollar Index struggles to hold above 96.50.
- USD/JPY remains directionless on Monday.
- Coming up: Markit Services PMI and ISM non-manufacturing PMI reports.
The USD/JPY pair is fluctuating in a very tight range on Monday and is having a difficult time setting its next near-term direction. After rising to a fresh session high near 113.30, the pair lost its traction in the last hour and eased below 113.20, where it started the week. As of writing, the pair was down 0.02% at 113.18.
The greenback’s market valuation today seems to the main driver of the pair’s price action. As investors are waiting for October’s final service sector PMI reports, the US Dollar Index, which tracks the buck against a basket of six major currencies, failed to preserve its momentum and was last seen down 0.04% on a daily basis at 96.46.
Tuesday’s midterm elections in the United States is likely to be the next significant catalyst for the pair. “What will be the effect on market psychology of impeachment and the investigations of the Trump administration and its officials that the Democrats plan if they gain control of the House? The longer and more intense the questions the greater the potential for a damaging impact,” Joseph Trevisani, senior analyst at FXStreet, said.
“A Democratic House and Republican Senate, with narrow majorities in each would lead to legislative and policy gridlock. The administration would not be able to advance its economic approach but its beneficial effects would remain to encourage growth.”
Technical levels to consider
The initial support for the pair aligns at 112.60 (50-DMA) ahead of 111.90 (100-DMA) and 111.35 (Oct. 26 low). On the upside, resistances could be seen at 113.40 (Oct. 31 high), 113.90 (Oct. 8 high) and 114.50 (Oct. 3 high).
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