USD/JPY: downward correction expected on a break below 112.60
|USD/JPY Current price: 112.75
- Japanese August inflation hit 1.3% YoY, slowly giving signs of life.
- US preliminary Markit PMI for September could indicate modest growth.
The USD/JPY pair continued rallying during the Asian session, to hit 112.86, its highest since July 19 amid persistent dollar's weakness, with USD selling resuming by the end of the US session. Japan's National CPI hit 1.3% YoY well above the 1.1% expected or the previous 0.9%, although the core reading excluding volatile food and energy prices, met market's expectations by printing 0.4%. The September preliminary Nikkei Manufacturing PMI showed that the pace of growth was below the expected one, with the index printing 52.9, above the previous 52.5, but below the forecasted 53.1. The All Industry Activity Index came in at 0.0% in July, below the 0.2% expected and with the previous month reading revised to -0.9%. The US will see today the release of the September preliminary Markit indexes, seen above final August readings.
Meanwhile, and despite the positive momentum in equities persist, and US Treasury yields hold to recent gains, the pair trades around 112.75. In the 4 hours chart, the price remains well above bullish 100 and 200 SMA, while technical indicators are losing directional strength well above their mid-lines, suggesting that selling interest remains limited. Above the mentioned daily high, the next resistance is 113.17 July´s high, while below 112.60, the pair could correct lower ahead of the weekend.
Support levels: 112.60 112.15 111.80
Resistance levels: 112.85 113.20 113.50
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