USD/JPY Analysis: holding at higher ground ahead of US first-tier events
|USD/JPY Current price: 108.65
- Japanese June Large Retailers’ Sales decreased by less-than-anticipated.
- Speculative interest likely to stay on-hold ahead of US Fed’s announcement.
- USD/JPY consolidates near July’s highs, needs to retake the 109.00 mark.
The USD/JPY pair keeps consolidating around the 108.60 level, flat for the day after an early slide to 108.41. The American currency remains the strongest, which in the case of this particular pair, offsets the effect of lower US government debt yields. Equities trade mostly lower, with the FTSE being an exception, as the London benchmark founds support in a collapsing Pound. As for macroeconomic data, Japan released June Retail Trade, which remained unchanged monthly basis, but rose by 0.5% when compared to a year earlier, this last beating the market’s expectations. Also, Large Retailers’ Sale in the same month decreased by less than expected, down by 0.5%. The US calendar will remain light this Monday, as the country will only release the Dallas Fed Manufacturing Business Index for July, foreseen at -5.0 vs. the previous -12.1.
The US Federal Reserve is having a monetary policy meeting this week and is expected to cut rates by 25bps. Policymakers are also anticipated to offer a softer approach to future rate cuts. The country will release July employment data on Friday. With those two first-tier events ahead, seems unlikely the USD/JPY pair could find a direction.
USD/JPY short-term technical outlook
The USD/JPY pair is bullish according to technical readings in the 4 hours chart, as an intraday slide was contained by buying interest aligned around a bullish 20 SMA, which keeps advancing above the 100 and 200 SMA. Technical indicators offer modest upward slopes well into positive ground, although below Friday’s highs, supporting an upward extension without confirming it. The pair has a strong support in the 108.30/40 price zone, and the positive tone will likely persist as long as it holds above it. The bullish momentum will likely resume on a break above 109.00.
Support levels: 108.40 108.00 107.65
Resistance levels: 109.00 109.35 109.80
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