USD/JPY analysis: bullish potential still limited
|USD/JPY Current price: 111.22
- Japanese industrial production rose less than expected in November.
- US data could define next short-term move, bearish trend to resume below 111.00.
The USD/JPY pair surged to a fresh weekly high of 111.47 this Thursday, holding on to gains ahead of Wall Street´s opening, A sudden recovery in the USD coupled with some not so encouraging headlines coming from Japan to send the pair higher. News hit the wires that the BOJ cooled down markets by saying that monetary stimulus is needed for now, while Japanese industrial production rose less than estimated in November, up 0.5%, matching October's figure but below the expected 0.6%. Annualized production, however, surged 3.6% against an expected 1.9%.
The US is about to release its December Housing Starts and Building Permits, both expected to show large slides, of 1.7% and 1.0% respectively. Weekly jobless claims, for the week ended January 12th, are expected at 250K from previous 261K, while the Philadelphia manufacturing index for January is expected at 25.0 from the previous 26.2. In the meantime, European equities struggle around their opening levels, while US Treasury yields advance modestly at multi-month highs.
Technically, the daily chart for the USD/JPY pair shows that it's still trading below its 100 and 200 DMAs, this last around 111.75, providing an immediate dynamic resistance. Shorter term, and according to the 4 hours chart, the pair keeps trading below its 100 and 200 SMAs, with the shortest accelerating below the larger one, the Momentum indicator aims to regain the upside above its 100 level, while the RSI heads marginally lower around 53, all of which suggests a limited upward potential at the time being.
Support levels: 111.05 110.60 110.20
Resistance levels: 111.75 112.10 112.50
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