USD/JPY recovers modestly from 108, stays in the negative territory
- Wall Street suffers losses in early trade on Monday.
- US Dollar Index stays stuck in tight daily range.
The USD/JPY pair edged down to the 108 area earlier in the day but was able to retrace a small portion of its daily losses. As of writing, the pair was down 0.25% on a daily basis at 108.25.
With global equity indexes losing traction on Monday amid resurfacing fears of a global economic slowdown becoming more imminent following disappointing trade data from China, the risk-off mood allowed the JPY to gather strength against its rivals. In the second half of the day, Wall Street opened sharply lower to put more pressure on the pair. However, as the Dow Jones Industrial Average and the S&P 500 both rebounding modestly in the last hour, the pair was able to pull away from its daily lows.
On the other hand, as markets are trying to figure out for how long the government shutdown will continue in the U.S., the dollar stays relatively quiet with the US Dollar Index fluctuating in a narrow band on Monday. At the moment, the DXY was down only 0.05% on the day at 95.62.
There won't be any macroeconomic data releases in the remainder of the day. During the Asian trading hours on Tuesday, machine tool orders from Japan, which declined 16.8% on a yearly basis in December, will be looked upon for fresh impetus.
Technical levels to consider
The pair could face the initial resistance at 109.26 (20-DMA) ahead of 110 (psychological level) and 110.50 (Dec. 31, 2018, high). On the downside, supports could be seen at 108 (psychological level/daily low), 107.50 (Jan. 4 low) and 106.75 (Jan. 3 low).