USD/JPY confined in a trading range around 105.50 level

The USD/JPY pair has been confined within a 50-pip trading range since morning but remained well supported above 105.00 handle and is currently hovering around 105.60 region.

Earlier during Asian trading session the pair benefited from investors drive away from traditional safe-haven currencies in the wake of a failed attempted military coup in Turkey. Moreover, Friday's upbeat US economic also seems to support the buoyant sentiment surrounding the greenback. 

Adding to this, receding fears of China-led global economic slowdown and expectations of additional fiscal stimulus from Japanese government is seen exerting further selling pressure around the Japanese Yen. 

Going forward the pair might continue to take cues from sentiment surrounding global equity markets. Meanwhile, rising prospects of further easing might restrict any sharp downslide for the pair.

Technical outlook

Dukascopy Bank SA team notes, "any upside development is expected to be limited around 106.50. Technical indicators are also in favour of the bullish outcome, but another decline is quote possible, with the lower border being the monthly PP at 104.36 and the 104.50 mark acting as a psychological support as well, bolstering the pivot point."