USD/JPY struggles to recover above 112 despite positive market sentiment

  • BoJ's Kuroda says the bank could consider additional easing.
  • US Dollar Index stays calm near the 97 mark.
  • Coming up: Industrial production and capacity utilization from the U.S.

After fluctuating in a tight 20-pip range on Monday, the USD/JPY pair failed to make a decisive move in either direction today and was last seen trading at 111.90, losing 0.12% on a daily basis.

Earlier in the day, Bank of Japan Chief Kuroda said that the BoJ will consider additional easing measures if the momentum toward the 2% inflation goal were to weaken further. Echoing Kuroda's comments, Japan's Finance Minister Taro Aso argued that the BoJ needed to continue easing in order to achieve the inflation target. Nevertheless, the JPY didn't react to these comments and allowed the pair to remain in its range.

On the other hand, for the second straight day, the US Dollar Index is moving sideways below the 97 mark in the absence of significant macroeconomic data releases. Later in the session, the Fed will publish its industrial production and capacity utilization, which are unlikely to impact the greenback's market valuation.

Meanwhile, major European equity indexes are posting modest gains on Tuesday and the S&P 500 Futures is adding more than 0.3%. Additionally, the 10-year US T-bond yield is up 0.5% to reflect a risk-on atmosphere that could keep the pair's losses limited in the remainder of the day.

Technical levels to consider

The pair could face the initial support at 111.50 (200-DMA) ahead of 111.15 (50-DMA) and 110.40 (100-DMA). On the other hand, resistances are located at 112 (psychological level), 112.60 (Dec. 20 high) and 113.35 (Dec. 10 high).

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