USD/JPY analysis: no catalyst just yet
|USD/JPY Current price: 111.96
- Japan National inflation seen improving modestly in March.
- Rising US equities and softer US Treasury yields gave opposing clues to speculative interest.
The USD/JPY pair continued trading within familiar levels, briefly falling to 111.76, as weak European data released at the beginning of the London session triggered a run to safety, benefiting the JPY just temporarily. Strong US data and the better performance of Wall Street, helped the pair recover some ground, although it remained capped by the 112.00 figure. Opposing to the positive momentum in stocks, US Treasury yields edged lower, after the Fed's Beige Book showed that the local economy grew at a slight-to-moderate pace in March and early April, growing anyway, also undermined by better-than-expected US retail sales, a sign of solid spending in the worlds' largest economy.
Early Thursday, market talks indicated that BOJ was likely to revise its inflation forecast, now seen below 2.0% until March 2022. Also, at the beginning of the day, Japan released the preliminary April Nikkei Manufacturing PMI resulted at 49.5, still in contraction territory but slightly better than the previous 49.2. Japan will release March National CPI early Friday, seen up by 0.5% YoY.
The pair is set to close a fifth consecutive day at around 112.00, little changed throughout the week. In the 4 hours chart, the pair is unable to surpass a now directionless 20 SMA, while the 100 SMA advances above the 200 SMA below the current level. The momentum indicator in the mentioned chart remains stuck to its 100 level, turning marginally lower, while the RSI indicator also lost upward strength and gains modest downward traction in neutral levels. Thin market conditions during the upcoming Asian session, as only the Japanese market will be open, could exacerbate the reaction to local inflation figures, although no relevant breakouts are foreseen at the time being.
Support levels: 111.75 111.40 111.10
Resistance levels: 112.15 112.50 112.85
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