FxWirePro: USD/JPY struggles to extend previous session's gains, 21-EMA offers stiff resistance

USD/JPY chart - Trading View 

USD/JPY was trading 0.21% lower on the day at 105.68 at around 04:30 GMT, after closing 0.53% higher in the previous session.

The major is struggling to extend previous session's gains, 21-EMA is capping upside at 106.03.

Federal Reserve's recent decision to adopt a more relaxed approach to controlling inflation keeps the US dollar depressed. 

US dollar’s broad weakness drags the DXY (dollar index)to the lowest since May 2018 and USD/JPY tracks the index lower.

Improved risk appetite in the markets following upbeat China Caixin PMI adds to the pair's bearish woes.

Data released earlier today showed China's Caixin Manufacturing PMI rose to 53.1 in August, surpassing the forecast of 52.6 and up from July's 52.8 reading.

Looking forward, focus remains on the US ISM Manufacturing PMI which is expected to rise to 54.5 from 54.2 prior.

Technical studies support a bearish bias. Rejection at 21-EMA to see downside resumption. Test of lower Bollinger band at 105.14 likely. Breakout at 21-EMA could change near-term dynamics.