USD/JPY Price Analysis: Extends the range play around 110.00 mark ahead of US CPI

A combination of factors pushed USD/JPY higher for the third successive day.
The formation of a rectangle points to indecision over the near-term direction.
Investors now eye US consumer inflation figures for some meaningful impetus.

Haresh Menghani FXStreet

The USD/JPY pair held on to its intraday gains through the first half of the European session and was last seen hovering near daily tops, just above the key 110.00 psychological mark.

The underlying bullish sentiment in the financial markets undermined demand for the safe-haven Japanese yen and pushed the USD/JPY pair higher for the third successive day. Bulls further took cues from a modest uptick in the US Treasury bond yields, though a subdued US dollar price action kept a lid on any further gains.

Looking at the broader technical picture, the USD/JPY pair has been oscillating in a narrow trading band over the past four weeks or so. This constitutes the formation of a rectangle on the daily chart and points to indecision among traders over the pair's near-term direction, warranting some caution before placing aggressive bets.

Meanwhile, technical indicators on the said chart are holding with a mild positive bias but, so far, have struggled to gain any meaningful traction. Investors seemed reluctant amid uncertainty over the likely timing of the Fed's tapering plan and ahead of Tuesday's release of the latest US consumer inflation figures.

Hence, any subsequent move up might continue to confront stiff resistance near the 110.30-35 supply zone, or the top boundary of the mentioned trading range. A sustained strength beyond will mark a fresh bullish breakout and set the stage for additional gains, towards the next relevant resistance near the 110.55-60 region.

Some follow-through buying has the potential to lift the USD/JPY pair beyond August monthly swing highs, near the 110.80 region, towards reclaiming the 111.00 mark for the first time since July 5.

On the flip side, the 109.60-55 horizontal zone continue to protect the immediate downside ahead of the trading range support near the 109.45 area. A convincing breakthrough will shift the bias in favour of bearish traders and turn the USD/JPY pair to accelerate the slide further towards the 109.00 round-figure mark.

USD/JPY 4-hour chart

Technical levels to watch

USD/JPY

Overview
Today last price	110.07
Today Daily Change	0.08
Today Daily Change %	0.07
Today daily open	109.99

Trends
Daily SMA20	109.89
Daily SMA50	109.95
Daily SMA100	109.82
Daily SMA200	107.99

Levels
Previous Daily High	110.16
Previous Daily Low	109.84
Previous Weekly High	110.45
Previous Weekly Low	109.62
Previous Monthly High	110.8
Previous Monthly Low	108.72
Daily Fibonacci 38.2%	110.04
Daily Fibonacci 61.8%	109.96
Daily Pivot Point S1	109.83
Daily Pivot Point S2	109.67
Daily Pivot Point S3	109.51
Daily Pivot Point R1	110.15
Daily Pivot Point R2	110.32
Daily Pivot Point R3	110.48

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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