USD/JPY edges higher toward 113 as DXY gains traction

• DXY turns flat above 93 in the early NA session.
• Global stocks continue to perform well ahead of Christmas.

After moving sideways near mid-112s for the majority of the day, the USD/JPY pair gained traction in the last couple of hours and retraced all of its losses from Monday. As of writing, the pair was trading at 112.82, up 0.24% on the day.

The US Dollar Index, which started the week under pressure and dropped below the 93 mark on Monday, was able to float above that handle during the Asian and European trading hours as the robust performance of the 10-year US T-bond yields allowed the greenback to show resilience against its peers. As of writing, the 10-year T-bond yield was up nearly 1.5% while the DXY was virtually unchanged on the day at 93.25. Today's data from the U.S. showed that housing starts increased by 3.3% on a monthly basis in November and came in better than the market estimate of -3.7%.

Moreover, following Wall Street's yet another record-setting rally yesterday, global equity indexes continued to post gains on Tuesday and led to another upbeat start by US stocks. At the moment, the Dow Jones Industrial Average was adding 0.08% while the S&P 500 was flat on the day. 

With no more macroeconomic data releases in the remainder of the day, the pair is likely to continue to track the DXY. In case the US House approves the final version of the tax bill later today, we can see a relief rally in the greenback, which could translate to more gains in the pair.

Technical outlook

Valeria Bednarik, American Chief analyst at FXStreet, writes, "from a technical point of view, the neutral stance persists, with the price stuck around its 100 and 200 SMAs in the 4 hours chart, which head nowhere in a 30 pips' range, while technical indicators extend their consolidative phase around their mid-lines. An immediate support comes at 112.35, with a more relevant one around 112.00, this last, the level to break to confirm additional declines ahead. Selling interest has rejected advances around 112.80 since last Thursday, being then the level to break to confirm additional gains ahead."