FxWirePro: USD/JPY extends gains above 21-EMA support, focus on U.S. inflation data

USD/JPY chart - Trading View 

USD/JPY was trading 0.12% higher on the day at 110.06 at around 04:50 GMT. The major has resumed upside after Doji formation on Monday's candle. 

Dollar bulls are back in action as the US Federal Reserve is expected to reduce its asset purchases soon, despite a surge in COVID-19 cases. 

Market focus remains on the key U.S. consumer price data due at 1230 GMT later today. Analysts expect core CPI to have risen 0.3% in August from July.

U.S. inflation data could offer cues on the Federal Reserve's timeline to start tapering stimulus measures meant to aid economic recovery from the pandemic.

The FOMC meets on Sept. 21-22. The central bank officials are keeping a close watch on inflation expectations as they try to evaluate whether the pricing pressures will pass or have more lasting effects.

Markets will keep a close eye on central bank's announcement on when it will start winding up its bond-buying programme.

The dollar index DXY hit 92.887 on Monday, its highest since Aug. 27. It was largely muted on the day at 92.61 at around 04:55 GMT.

Technical bias for USD/JPY remains neutral. The pair trades within a 'Symmetric Triangle' pattern. Breakout will provide clear direction.

Major supports align at 108.36 (21-EMA), 108, 107.14 (110-EMA). While major resistance aligns at 110.19 (Converged cloud top and trendline), 110.44 (Spet 8 high), 111.