USD/JPY Forecast: Bulls still cautious, 108.10 critical resistance
|USD/JPY Current Price: 107.83
- Japan’s consumer confidence improved in May, despite awful sales and industrial production figures.
- The Japanese Jibun Bank Manufacturing PMI seen unchanged at 38.4 in May.
- USD/JPY continues trading in a well-limited range, lacking directional strength.
The USD/JPY pair finished the week with modest gains around 107.80, having spent these last few days confined to a tight range below the 108.00 mark. The pair fell on Friday to 107.07, holding on to the lower ground after dismal US data. It later recovered on the back of comments from the US Federal Reserve’s head Powell, who said that the Fed is strongly committed to using all of its tolls, although clarifying emergency tools are for lending but not for spending. The recovery was also backed by US President Trump, as he was softer-than-anticipated in its announcement on measures on China. He did not mention new tariffs or the end of phase one of the trade deal but decided to reduce Hong Kong’s privileges.
Japanese data released by the end of the week was mixed, as Tokyo inflation ex-fresh food printed at 0.2% YoY in May, better than anticipated. April Retail Trade, however, plunged by 13.7% when compared to a year earlier while Industrial production fell by 14.4% in the same period, worse than anticipated. Housing Starts were also down by 12.9%, while the May Consumer Confidence Index surged in May to 24. This Monday, the country will see the release of the Jibun Bank Manufacturing PMI seen unchanged at 38.4 in May.
USD/JPY short-term technical outlook
The daily chart for the USD/JPY pair continues to indicate an absence of directional strength, neutral for over two weeks now. It has met buyers from a flat 20 DMA while it remained below its 100 and 200 DMA, both converging at around 108.30. Technical indicators, in the meantime, remain within neutral levels. In the 4-hour chart, the pair settled above all of its moving averages, although the RSI indicator turned flat around 55 and the Momentum resume its slide after briefly entering positive territory, now below its mid-line. The bullish potential could increase on a break above 108.10, its immediate resistance.
Support levels: 107.30 106.90 106.65
Resistance levels: 108.10 108.45 108.80
View Live Chart for the USD/JPY
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