USD/JPY The upside is capped by 61.8% Fibo

Although USD/JPY remains confined to Monday’s range, the Japanese Yen is showing strength after the preliminary July Nikkei Manufacturing PMI figures which came under market's expectations. Alongside with this results, the country's leading index was revised to a 6-month high of 106.9 in May giving a reflection to the current economic activity that has fallen to 116.8 in May from 117.5 in the previous month. US Treasury yields are keeping Monday’s tops but there is no perspective for further rally which leads to slowdown in the upward development for the pair. Technically speaking the short-term outlook remains neutral. On the four hour time frame the price is developing below its bearish 20-day SMA and flat 50-day and 100-day SMAs. RSI is located around 36 and has lost directional strength. Stochastic has turned to north but remains below its mid-line. Currently the pair is consolidating around 61.8% Fibonacci retracement of its latest bullish run and according to technical indicators the chances for steeper advance are limited. The upside is still capped by 111.45 where the 100-day SMA is developing while the downside remains supported by the 110.80 – 110.70 zone.