USD/JPY edges lower toward 111, looks to record modest gains for the week
|- US Dollar Index steadies near 95.
- The labor market remains strong in the U.S., service sector activity slows down.
- Investors continue to seek safe-havens amid rising trade concerns.
The USD/JPY pair came under a renewed selling pressure in the NA session and extended its losses to touch a fresh daily low at 111.10. As of writing, the pair was trading a couple of pips above that level and losing 0.5% on the day.
This recent fall seems to be the product of a combination of a risk-off mood and a weaker greenback. Today's data from the United States showed that nonfarm payrolls increased by 157K to miss the analysts' estimate of 190K. On the other hand, the June number got revised up to 248K from 213K, the unemployment ticked down to 3.9%, and the average hourly earnings rose 2.7% on a yearly basis. The reaction to the mixed data failed to put a heavy selling pressure on the greenback and the US Dollar Index easily reversed its initial losses.
However, the non-manufacturing PMI data released by Markit and the ISM later in the session both showed that the business activity in the service sector lost momentum in July. Markit PMI eased to 56 from 56.2 and the ISM PMI slumped to 55.7 from 59.1. The US Dollar Index struggled to stay in the positive territory after the data and dropped back to the 95 handle.
Meanwhile, escalating trade tensions following China's announcement of new tariffs on $60 billion worth of U.S. goods helped traditional safe-havens such as the JPY stay strong in the last session of the week. Despite today's fall, the pair is still up around 20 weeks for the week.
Technical outlook
The pair could face the first technical support at 110.90 (50-DMA) ahead of 110.40 (Jul. 6 low) and 110 (psychological level). On the upside, resistances align at 111.70 (20-DMA), 112.15 (Aug. 1 high) and 113 (psychological level/Jul. 17 high).
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