USD/JPY struggles to recover above 113 as Wall Street starts day lower

• US stocks modestly lower at the opening.
• DXY preserves daily gains above 92.
• US 10-year T-bond yield remains in the red.

The USD/JPY pair, which closed the previous week nearly 50 pips higher, started the second week of January under a modest pressure and broke below the 113 handle. As of writing, the pair was trading at 112.95, losing 0.1% on the day.

The modest recovery that the DXY is staging on Monday is keeping the pair's losses limited. The greenback took advantage of the quiet economic calendar and the US Dollar Index rose above the 92 handle for the first time since December 29. Later in the session, FOMC members Bostic and Williams will be delivering their speeches. Hawkish comments could help the index extend its gains above the 92 mark.

In the meantime, major equity indexes in the U.S. started the day lower with the Dow Jones Industrial Average and the S&P 500 indexes down 0.18% and 0.15% respectively. Moreover, the 10-year US T-bond yield is having a difficult time erasing its losses on Monday, suggesting that investors are staying away from riskier assets. The traditional safe-haven JPY could continue to show resilience against the greenback if the market sentiment doesn't improve in the remainder of the session.

Technical outlook

The first technical support for the pair could be seen at 112.70 (100-DMA) ahead of 112 (psychological level/Jan. 2 low) and 111.70 (200-DMA). On the upside, resistances align at 113.40 (daily high), 113.75 (Dec. 12 high) and 114.40 (Nov. 3 high). The RSI indicator on the daily chart is moving near the 50 handle, showing a short-term neutral outlook for the pair.