USD/JPY Analysis: at fresh July lows, 106.77 on the cards
|USD/JPY Current price: 107.35
- Japan National inflation expected to have ticked higher in June.
- Trade tensions between the US and China and dismal earnings reports backed the Yen.
- USD/JPY to resume its decline on a slide below 107.50, July’s monthly low.
The USD/JPY pair has fallen to a fresh July low of 107.31, with an intraday recovery being contained by sellers around the 108.00 figure. Renewed trade tensions between the US and China and disappointing earnings reports fueled demand for safe-havens, resulting in government bond yields falling and dragging the pair alongside. The yield on the benchmark 10-year Treasury note fell intraday to 2.03%, trimming last week’s gains, recovering just modestly to settle at 2.04%, amid speculation that the Fed will cut rates more than once this year, following dovish comments from Fed’s Williams.
Japan released the Merchandise Trade Balance Total, which printed a larger-than-expected surplus of ¥589.5B, as a result of an unexpected drop in imports, down by 5.2% when compared to a year earlier. Exports also declined by more-than-anticipated, falling by 6.7% in the same period. The positive headline was overshadowed by the same data fueling trade war concerns. This Friday, the country will release National inflation, seen steady at 0.7% YoY. Core CPI ex-food and energy is expected to result at 0.6%, up from the previous 0.5%. The country will also release May’s All Industry Activity Index, seen at -0.2% vs. the previous 0.9%.
USD/JPY short-term technical outlook
The USD/JPY pair is heading into the Asian session trading a couple of pips above the mentioned low, technically bearish according to the 4 hours chart, as the pair continues developing below all of its moving averages, and with the 20 SMA gaining bearish traction below the larger ones. The Momentum indicator in the mentioned chart has extended its decline within negative territory, while the RSI turned sharply lower, all of which maintains favors further slides ahead. Trading now around the previous monthly low, the pair has room to extend its decline to 106.77, June’s low, during the upcoming sessions.
Support levels: 107.10 106.75 106.30
Resistance levels: 108.00 108.40 108.80
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