USD/JPY clings to small gains above 110.50 despite USD weakness

• US Dollar Index continues to push lower below 97.
• European equity indexes stay quiet on Monday.
• President's Day holiday in the United States.

The USD/JPY pair is trading in a narrow band on Monday as markets are struggling to identify the next catalyst. As of writing, the pair was up 0.1% on the day at 110.58.

The US Dollar Index, which closed the previous week on a negative note on dovish Fed expectations, extended its drop on Monday and was last down 0.23% on a daily basis at 96.70. Last Friday, Atlanta Fed President Bostic said that the Fed was in no rush to arrive at neutral rates and San Francisco Fed President Daly told The Wall Street Journal that there was a good chance that the Fed could refrain from hiking rates in 2019.

In the remainder of the session, the pair is likely to continue to move sideways as the President's Day holiday in the U.S. is expected to weigh on the trading volume.

Later in the week, the FOMC's meeting minutes, which is scheduled to be released on Wednesday, will be watched closely by the participants. On the other hand, trade balance data from Japan will be looked upon for fresh impetus on Tuesday.

Key technical levels

The pair could encounter the first technical resistance at 111 (psychological level/Feb. 13 high) ahead of 111.30 (100-DMA) and 111.55 (200-DMA). On the downside, supports are located at 110/109.90 (psychological level/20-DMA), 109.50 (50-DMA) and 108.80 (Jan. 30 high).