USD/JPY Analysis: short-term advance set to continue
|USD/JPY Current Price: 106.63
- Japanese Tokyo inflation set to remain subdued in August.
- Easing US-China tensions weighed on safe-haven assets.
- USD/JPY recovery would likely catch momentum on a break above 107.00.
The USD/JPY pair has advanced for a second consecutive day, as relief news coming from the US-China trade war front played against the safe-haven Yen. The pair bounced alongside government debt yields and equities, which accelerated their recoveries after US President Trump announced that trade talks with China would take place by the end of the day. US indexes flirted with August highs, while the yield for the benchmark 10-year Treasury note bounced from 1.44% to 1.54%, to finish the day around this last, despite a lackluster auction of shorter-term bonds. At the beginning of the day, Japan released the August Consumer Confidence Index, which declined to 37.1 from the previous 37.8. During the upcoming Asian session, the country will release August Tokyo inflation, with the core yearly reading seen up by a modest 0.7%. Japan will also release Retail Trade and Industrial Production figures for July.
USD/JPY short-term technical outlook
The USD/JPY pair is trading at daily highs in the 106.60 price zone ahead of the Asian opening, just below the top of the last five-week range. In the 4 hours chart, the pair is above the 20 and 100 SMA, while below the 200 simple moving average, now at around 107.00. Technical indicators hold on to daily highs decelerating their advances rather in line with decreased volumes that indicating upside exhaustion. The pair could resume its decline on a break below 106.40, while the short-term rally will likely continue once above 107.00.
Support levels: 106.40 106.10 105.75
Resistance levels: 107.00 107.30 107.60
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