USD/JPY sticks to modest gains, above mid-110.00s but lacks follow-through
| • JPY weighed down by the possibility of further BoJ policy easing.
• Subdued USD price action fails to provide any additional boost.
• Anxiety ahead of US-China trade talks keeps a lid on additional gains.
The USD/JPY pair held on to its mildly positive tone through the early European session, albeit seemed lacking any strong follow-through momentum.
The pair quickly reversed the early dip to an intraday low level of 110.45 and turned higher for the second consecutive session after the BoJ Governor Haruhiko Kuroda raised the possibility of further policy easing.
Speaking at the Japanese parliament, Kuroda's comments showed the central bank's readiness to ramp up its stimulus if a sharp appreciating in the domestic currency hurts the economy and derail the path towards achieving 2% inflation target.
Meanwhile, the US Dollar extended its sideways price action, which coupled with nervousness ahead of the next round of US-China trade talks underpinned the Japanese Yen's relative safe-haven status and further collaborated towards keeping a lid on any subsequent up-move.
Moving ahead, there isn't any major market-moving economic data due for release from the US and hence, the USD price dynamics, along with the broader market risk sentiment might continue to act as a key determinant of the pair's momentum on Tuesday.
Technical levels to watch
Immediate resistance is pegged near the 110.90-111.00 area, above which the pair seems all set to aim towards testing 100-day SMA barrier near the 111.60 region. On the flip side, the 110.45 region now seems to have emerged as immediate support, which if broken might turn the pair vulnerable to accelerate the slide further towards challenging the key 110.00 psychological mark.
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