USD/JPY directionless above 111, headed for weekly gains
|The USD/JPY pair remains stuck in a 30-pip range on the last trading day of the week but is marching towards a positive closing on a weekly basis for the second week in a row. As of writing, the pair is trading at 111.25, down 0.07% on the day.
Despite relatively upbeat macro data, the US Dollar Index eased below the 97 handle and is now losing 0.34% on the day at 96.93. However, this drop wasn't strong enough to dictate the pair's price action as major equity indexes in the U.S. erased their opening losses and moved into the positive territory, suggesting that investors are not interested in safe havens.
Commenting on the DXY retreat, Bloomberg analysts explained that the dollar rounded out the week on a defensive footing as modest losses eroded the first weekly gain since the end of May, with the decline attributed to position squaring ahead of the weekend rather than any significant shift in sentiment.
FOMC members Loretta Mester and Jerome Powell will be giving speeches later in the session. However, the fact that the dovish comments from St. Louis Fed President James Bullard earlier in the session didn't cause any market reactions suggest that those speeches may not be able to force the pair out of its daily trading channel.
Technical outlook
The RSI on the daily graph is moving sideways near the 50 handle, suggesting that the pair is neutral in the short-term. 111.55, where the 50-DMA and the 100-DMA meet is forming a strong resistance ahead of 112.15 (200-DMA) and 112.75 (May 17 high). On the downside, supports could be seen at 111.00 (psychological level), 110.55 (20-DMA) and 110 (psychological level).
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