USD/JPY Analysis: above 108.00, bulls hesitate at key resistance
|USD/JPY Current price: 108.25
- Nikkei Manufacturing PMI expected to have bounced just modestly in July.
- US Treasury yields recovered alongside Wall Street, underpinning the pair.
- Broad-based dollar’s strength pushed the USD/JPY pair up for a third consecutive day.
The USD/JPY pair is finishing a third consecutive day with gains, although the advance has been painful, to say the least, as it stands barely 50 pips above Friday’s close. The advance was backed by resurgent demand for the greenback, alongside a recovery in US government bond yields. The yield on the benchmark 10-year Treasury note recovered to settle at 2.06%, after touching 2.02% Monday. Japan will open its macroeconomic week early Wednesday by releasing the final versions of the Leading Economic Index and the Coincident Index, both for May, alongside the preliminary estimate of the Nikkei Manufacturing PMI for July, foreseen at 49.7 vs. the previous 49.3.
USD/JPY short-term technical outlook
The USD/JPY pair has retreated from a daily high of 108.28 to close the day just below this last, trapped in the last trading session of the day between Fibonacci levels, with the 61.8% retracement of the July’s decline capping advances. In the 4 hours chart, the price is holding above the 100 and 200 SMA, which lack directional strength, while the 20 SMA advances below the current level, now around the 38.2% retracement of the same slide at 107.90. Technical indicators have eased just modestly within positive levels, the Momentum now lacking directional strength yet the RSI indicator recovering, now at fresh weekly highs in the 62 level. The pair has a relevant high just above the mentioned Fibonacci level and would need to advance beyond 108.40 to have chances of extending its gains.
Support levels: 108.00 107.50 107.20
Resistance levels: 108.40 108.85 109.20
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