USD/JPY is stuck in a tight range and a break in either direction could be important

• USD/JPY is trading just under flat on Tuesday.
• The price is in a narrow range between 107.63 and 107.00.

USD/JPY 30-minute chart

Its always quite interesting when this type of range-bound pattern turns up in USD/JPY. All of the main safe-haven assets look like they are in limbo waiting for the next event to occur. In fact, there is more than enough negative data and news out today to send JPY, CHF and gold soaring but the only thing that seems to move is the indices. 

COVID-19 case numbers are rising in Arizona and China might be seeing a second wave in Beijing. But the liquidity story seems to be ruling the markets after US President Trump announced an infrastructure spending program and the Fed confirmed the news about bond buying but added to the news saying they will be doing some direct purchases too, not only via ETF's.

The chart below shows how narrow the range is. A break in either direction could help us determine the future path of the currency pair. During the Asian session, overnight on Monday (Tuesday's session) equities sold off quite heavily but USD/JPY held firm. Tonight could be interesting. 

The price is holding right between the 55 and 200 moving averages and seems to be using the 200 Simple Moving Average as support. Both the Relative Strength Index (RSI) and MACD are looking bearish with the signal line of the RSI under the mid-level. The MACD histogram has now turned red and the signal lines have broken lower too. 

Additional levels