Following two straight days with substantial gains, the USD/JPY pair struggled to find direction on Wednesday amid the subdued trading action but made a quick jump to a fresh 12-day high at 110.30 in the early NA session. As of writing, the pair was trading at 110.23, up 0.07% on the day.
The sharp rise witnessed in major global equity indexes on Monday and Tuesday provided a much-needed boost to the pair, helping it stage a significant rebound after losing more than 150 pips in the previous week. However, stock markets seem to have gone into a consolidation phase today with European indices staying little changed and Wall Street signaling towards a flat opening.
The only data from the U.S. showed that the seasonally adjusted Producer Price Index for final demand rose by 0.2% on a monthly basis in August after recording a 0.1% contraction in July. Although this data stayed below the market estimate of 0.3%, it didn't receive any major reactions from the market. However, the US Dollar Index recently gained traction and broke out of its consolidation channel. Although there were no clear catalysts behind that move, the DXY is holding onto its gains as it sits a tad above the 92 mark.
Technical outlook
Despite today's fluctuations, the pair remains stuck in a 30-pip range. Moreover, the RSI indicator on the daily graph is moving sideways a little above the 50 mark, supporting the view of the short-term neutral outlook. A daily close above the 110 mark could allow for an extension of the recovery gains. 110.80 (100-DMA) could be seen as the first technical hurdle ahead of 111.55 (200-DMA) and 112 (psychological level). On the downside, supports align at 110 (psychological level/50-DMA), 109.40 (20-DMA) and 108.20 (Sep. 11 low).
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