Today’s forex session has turned out to be a challenging one for the Greenback. Pricing has lagged, featuring consistent losses against the majors. The weakness has been a bit of a surprise considering this morning’s strong metrics reported by the Redbook Index.

On a month-over-month and year-over-year basis, Redbook came in well above expectations. This is a positive sign for the retail sector, as the index measures the performance of 9000 prominent U.S. general merchandise outlets. In addition, U.S. JOLTS Job Openings for June came in up from the previous release at 6.662 million.

Although secondary economic reports, each does support the narrative that the U.S. economy is growing. Regardless, the USD has struggled throughout the forex trading day.

USD/JPY Technicals

Against the Japanese yen, the USD has pared early losses. At press time, the USD/JPY is trading near the 111.25 handle, down 14 pips on the session. A rally in coming hours will bring a key level of topside resistance into play.

Since the selloff of mid-July, the USD/JPY has traded sideways between 112.00 and 110.50. This is a tight range and one that is likely to remain valid until Friday’s U.S. CPI release. Here are the levels to watch for the remainder of the trading day:

• Resistance(1): Bollinger MP, 111.52
• Resistance(2): Daily SMA, 111.86

Bottom Line: The U.S. overnight is scheduled with several secondary economic reports out of Japan. Foreign Reserves and Trade Balance statistics are due out but are unlikely to send this market directional. For now, a sell from topside resistance may develop in the hours to come.

Sells from 111.49 are a solids ways to play the rotational market conditions. With an initial stop loss at 111.76 and a moderate 1:1 risk vs reward ratio, this trade yields 27 pips on a failure to rally above the 111.50 handle.