USD/JPY clings to modest daily gains around 114 as markets ignore US inflation data

• Annual core CPI in the U.S. ticks down to 2.1% in October.
• Brexit optimism helps European stocks rise on Wednesday.
• US Dollar Index pulls back from highs, stays above 97.

After closing the previous day with small gains below the 114 mark, the USD/JPY struggles to make a decisive move in either direction on Wednesday and trades in the upper-half of its tight daily range. As of writing, the pair was up 0.1% on the day at 113.97.

According to the data published by the U.S. Bureau of Labor Statistics, the CPI rose 0.3% and 2.5% on a monthly and yearly basis, respectively, to match the market expectation. The annual core CPI, which excludes volatile food and energy prices, dropped to 2.1% from 2.2% recorded in September. Commenting on the inflation report, "Inflation at a perfect temperature for a 'normalizing ' Fed.  Core CPI at 2.1% slips toward the 2% target with the headline number 2.5% heading into an energy price decline.  No impact on Fed interest rate policy," FXStreet senior analyst Joseph Trevisani said.

 The US Dollar Index, which rose to 97.40 earlier in the day, didn't react to the data and was last seen up 0.2% on the day at 97.15. 

On the other hand, as the UK Cabinet is starting their Brexit discussion, major European equity indexes record decisive gains on Wednesday to reflect an improved market sentiment that hurts the demand for safe-havens. A similar action in Wall Street could help the pair rise above the 114 handle.

Technical levels to consider

The pair could face the first resistance at 114.20 (Nov. 12 high) ahead of 114.55 (Oct. 3 high) and 115.00 (psychological level). On the downside, are located at 113.60 (Nov. 13 low), 113.00 (psychological level/20-DMA/50-DMA) and 112.00 (100-DMA/psychological level).