USD/JPY Analysis: bulls looking for a break above 106.65
|USD/JPY Current price: 106.42
- Improved market’s sentiment weighing on safe-haven Yen.
- US Michigan Consumer Sentiment Index for August expected at 97.2.
- USD/JPY neutral-to-bullish in the short-term, downside well limited.
The market is heading into the weekend in a better mood, as US President Trump spoke about “productive” trade talks with China, calming speculative interest. Also, robust US Retail Sales released Thursday spooked, at least temporarily, the ghost of recession.
The USD/JPY pair is advancing beyond the 106.00 level, underpinned by recovering equities. Currently trading in the 106.40 region, the upside is capped as, despite yields bounced too, the advance there is quite modest.
Japan didn’t release relevant data at the beginning of the day. The US, on the other hand, will release July Housing Starts and Building Permits, and the more relevant preliminary Michigan Consumer Sentiment Index for August, seen at 97.2 from 98.4 in July.
USD/JPY short-term technical outlook
The USD/JPY is still being capped by the 38.2% retracement of its latest daily decline at 106.65, the immediate resistance. In the 4 hours chart, it´s holding above a bullish 20 SMA, which now converges with the 23.6% retracement of the same decline. The RSI indicator in the mentioned time-frame advances above its mid-line, currently at 58, although the Momentum indicator is still struggling with its mid-line, unable to confirm an upward extension. Beyond the mentioned Fibonacci level, the 100 SMA and the weekly high at around 107.00 provide the next resistance and a possible bullish target, should the recovery continue.
Support levels: 106.05 105.60 105.25
Resistance levels: 106.65 107.00 107.40
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