The USD/JPY pair has been confined in a 30-35 pips trading range above 104.00 handle amid mixed greenback performance.
Currently trading around 104.15 region, the pair recovered from early morning dip below 104.00 handle but failed to extend its recovery momentum despite of dovish comments from BOJ Governor Haruhiko Kuroda that CPI might remain slightly negative or around 0% for time being and showed central bank's readiness to adjust monetary policy to achieve its 2% inflation target.
The prevalent risk-off sentiment around European equity markets is supporting the Japanese Yen's safe-haven appeal and hindering the pair's recovery momentum. Moreover, the greenback, as measured by the overall US Dollar Index, has also retraced from higher levels and has failed to extend further support to the pair's recovery back above 104.00 handle.
Looking ahead, today's releases of Empire State Manufacturing Index, Capacity Utilization Rate and Industrial Production data, slated for release during early NA session, might provide some impetus for short-term traders ahead of Federal Reserve Governor Stanley Fischer speech later during the day.
Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd., notes, "Daily studies remain bullish and favor bullish resumption through 104.62 high, towards psychological 105.00 barrier and 105.60 (Fibo 76.4% of 107.47/99.52 descend) in extension."
"However, daily close above 104.43 (Fibo 61.8% of 107.47/99.52) is required to confirm bulls, as previous three attempts failed. This may signal prolonged consolidation, as Slow Stochastic is heading south after bearish divergence has formed on daily chart, which may trigger return to daily cloud top at 103.50."
"Firm break below daily cloud top could signal recovery stall and open way for deeper correction of 100.05/104.62 rally."