USD/JPY trades in upper-half of daily range near 112.80
- US Dollar Index approaches the 96 handle on Monday.
- European equity indexes stay in the positive territory.
The USD/JPY pair gained traction in the European morning on Monday and advanced toward the 113 handle as the greenback continued to gather strength against its peers. At the moment, the pair is up 0.2% on a daily basis at 112.80.
The ongoing drama surrounding Italy's budget proposal and the escalating domestic political tension in the UK weighed on the euro and the pound sterling to ramp up the demand for the greenback. After retreating to mid-95s during the Asian session, the US Dollar Index reversed its course and marched higher toward the 96 mark. As of writing, the DXY was up 0.25% on the day at 95.90.
Additionally, a modest rebound witnessed in the major European equity indices makes it hard for the safe-haven JPY to stay resilient vs its rival currencies. Ahead of Wall Street's opening bell, the Euro Stoxx 50, Germany's DAX 30 and the UK's FTSE 100 are up 0.4%, 0.65%, and 0.8%, respectively. A positive start to the day by the U.S. stocks could provide an additional boost to the pair in the second half of the day.
The only data from the U.S. will be the Chicago Fed's National Activity Index.
Technical levels to consider
The initial resistance for the pair aligns at 112.95 (20-DMA) ahead of 113.40 (Oct. 9 high) and 113.90 (Oct. 8 high). On the downside, supports are located at 112.25 (50-DMA), 111.70 (100-DMA) and 111.15 (Sep. 13 low).