USD/JPY is currently treading above the 98.80 area, which is right in line with a former resistance turned support zone. Stochastic is moving up from the oversold region, suggesting a potential bounce.

Take note that Japanese traders are on holiday today, which opens the possibility for higher volatility for yen pairs. Traders are awaiting news on the Fed’s Septaper for the FOMC statement on Wednesday this week so the dollar could be extra sensitive to US data.

US Empire State manufacturing index and industrial production are due today. Weaker than expected data could worsen the dollar’s ongoing selloff while strong figures could keep USD/JPY above the support zone.

By Kate Curtis from Trader’s Way