USD/JPY rebounds above 110, remains in daily range

After easing to 109.90 in the first half of the NA session, the USD/JPY recovered above 110 handle and is now trading at 110.10, up 0.13% on the day. Despite that move, the pair remains directionless in a 35-pip range on Tuesday as investors are getting ready for tomorrow's FOMC decisions.

Today's data from the United States didn't provide any fresh catalysts for the markets, and the US Dollar Index continues to float above the 97 handle. Although the index fell below that level a couple of times during the day, it failed to make a decisive move in either direction and is now at 97.04, down 0.11% on the day.

In the meantime, the major equity indexes in the U.S. started the day higher and are recovering yesterday's losses, making it difficult for the JPY to stay resilient against the USD. At the moment, both the Dow Jones Industrial Average and the S&P 500 indexes are up 0.4%. 

• US stocks advance during early trade, helped by recovery in tech stocks

FXStreet analyst Valeria Bednarik explains that as macroeconomic data has been steadily softening ever since 2017 started, the job's sector is still performing above expectations, with the US economy close to full employment but inflation has been mixed, and despite higher, far from stable at Fed's 2% target. She further adds that overall, and despite odds for a rate hike are high, the market expects it to be accompanied with a dovish statement, and the central bank reaffirming its dependence on macroeconomic data.

Technical levels to consider

On the daily graph, the RSI continues to move sideways a little below the 50 handle, suggesting that the pair is in a consolidation phase for the time being. 109.50 (Fib. 78.6% retracement of mid-April - mid-May rise) could be seen as the first technical support ahead of 109 (psychological level) and 108.30 (Apr. 18 low). On the upside, with a daily close above 110 (psychological level), the pair could aim for 110.70 (20-DMA), 111.25 (50-DMA) and 111.70 (100-DMA).

• USD/JPY neutral, likely between 109.30/111.00 – UOB