USD/JPY contained above 113.50, consolidates below 114.00

The US dollar has edged up on a calm session on Monday, to trim losses following a three-day reversal from four-year highs at 114.65. The pair has remained steady above 113.50 on Monday, yet unable to post a significant recovery, with upside attempts limited below 113.85.

The dollar steadies ahead of key macroeconomic data

Most major currencies have remained trading sideways within previous ranges, with the investors awaiting the release of monetary policy decisions by the European Central Bank, Bank of Japan, and the Bank of Canada plus the preliminary estimation of the third quarter’s US Gros Domestic Product.

The US dollar has been trading on a slightly firmer tone, especially during the Asian and European trading sessions. A moderate appetite for risk, reflected in the positive equity markets has weighed on the safe-haven Japanese yen. Most European markets have closed positive, while in the US, the Dow Jones ticks 0.1% up, the S&P Index rises 0.4% and the Nasdaq Index advances 0.8% buoyed by strong advances in Tesla and Paypal shares.

On the other hand, persisting inflation concerns, with oil prices hitting fresh multi-year highs earlier today, and softer US T-Bond yields, have weighed on demand for the greenback.

USD/JPY: Aiming to 114.55 – ING

On a broader view, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, maintains her positive outlook for the USD: “USD/JPY failed to close above the 114.55 October 2018 high last week and has now eased back to the 23.6% retracement at 113.38. Provided this holds the downside we should see recovery and a reattempt on the 114.55 high.”

Technical levels to watch