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USD/JPY continues to pull away from multi-week highs, stays in red below mid-113s

  • USDJPY consolidates last week's gains.
  • DXY fails to retake the 94 handle.
  • Market sentiment stays neutral on Monday.

After closing the previous week with a 70-pip increase, the USD/JPY pair started the day on a positive note and refreshed its highest level since November 14 at 113.58 before losing its momentum. As of writing, the pair was trading at 113.37, losing 0.1% on the day.

The pair's price action on Monday, however, seems to be a technical correction of last week's upsurge. The US Dollar Index, which was able to edge higher above the 94 mark following the employment report from the United States on Friday, is having a tough time regaining traction as investors remain reluctant to commit to early positions ahead of Wednesday's crucial FOMC meeting. Although a 25 bps rate hike is already priced in, investors are likely to react to updated economic projections. 

On the other hand, the trading action of European stocks on Monday fails to provide a clear clue regarding the investors' sentiment. The German Dax is trading virtually unchanged around 13,150 points while the UK FTSE 100 is up 0.45%. The broader Euro Stoxx 600 is also flat near 390 points. 

The only noteworthy data in the remainder of the day will be the JOLTS Job Openings from the U.S., which is unlikely to trigger any significant reactions.

Technical levels to consider

The pair could encounter the immediate resistance at 113.70 (daily high) ahead of 114.10 (Nov. 9 high) and 115 (psychological level). On the downside, supports could be seen at 113 (psychological level/50-DMA), 112.30 (20-DMA) and 111.70 (200-DMA). 

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