USD/JPY sticks to daily gains above 111

• US Dollar Index stays in the green near mid-95s.
• US 10-year yield up more than 1.5% on the day.
• Manufacturing PMI figures help the dollar preserve its gains.

After spending the Asian session in a tight range near the 111 handle, the pair gained traction on the broad-based greenback strength and rose to a five-day high at 111.53. Although the pair seems to have lost some steam around that level, it didn't have a difficult time staying in the upper half of its daily range and was last seen trading at 111.44, adding 0.33% on a daily basis.

The data released by the ISM on Tuesday showed that the Manufacturing PMI jumped to 61.3 in August from 58.1 in July and surpassed the market expectation of 57.7. Furthermore, the IHS Markit's Manufacturing PMI improved to 54.7 in the final reading from 54.5 in the previous estimate. Although both reports revealed that manufacturers were concerned about the Trump administration's trade policy and its potential negative impact on the sector, the US Dollar Index pushed higher to a touch a new two-week top at 95.75.

In the meantime, the US 10-year T-bond yield advanced to its highest level in three weeks at 2.906% to provide an additional boost to the pair. At the moment, the yield is up 1.6% on the day at 2.898%. On the other hand, major equity indexes in the United States started the day on a negative note and remain on track to end the day with modest losses.

In the early Asian session on Wednesday, the IHS Markit will release the Services PMI in Japan, which is expected to rise to 51.7 from 51.3.

Technical outlook

Despite today's upsurge, the RSI indicator on the daily chart stays near the 50 mark to suggest a near-term neutral outlook. On the downside, supports for the pair could be seen at 111.30 (50-DMA), 110.70 (100-DMA) and 110 (psychological level). Resistances align at 111.50 (daily high), 111.85 (Aug. 29 high) and 112.15 (Aug. 1 high).