USD/JPY: Rebound remains capped below 145.00, focus shifts to US ISM
|- USD/JPY treads water amid a broadly softer US dollar and light trading.
- The BOJ sticks to its easy policy stance in its Summary of Opinions.
- USD/JPY bulls remain hopeful while above 21 DMA and ahead of US ISM.
USD/JPY is consolidating the latest leg up from near 144.50, as the rebound remains capped below the 145.00 level amid a broadly softer US dollar and a mixed market mood.
Chinese, Australian and South Korean markets are closed, which leaves the major gyrating in familiar ranges amid thin liquidity. Investors also trade with caution ahead of the US ISM Manufacturing PMI release later this Monday. Although the main event risk this week remains the September month American jobs report.
In the meantime, the Fed and BOJ monetary policy divergence will continue to play out, with the US central bank highly likely to raise rates by 75 bps at its November meeting. Meanwhile, the BOJ must maintain current monetary easing until inflation stably exceeds 2%, the bank’s September meeting's Summary of Opinions stated.
Further, yen bulls struggle as confidence among Japan’s large manufacturers unexpectedly worsened for three straight quarters following the local currency’s rapid depreciation and deterioration in the global economic outlook.
From a short-term technical perspective, bulls keep their hopes high for a retest of the multi-decade highs of 145.90 so long as they hold above the bullish 21-Daily Moving Average (DMA).
That support is now aligned at 143.57. Ahead of that, buyers need a sustained move above the 145.00 level.
The 14-day Relative Strength Index (RSI) is pointing north above the midline, suggesting that there is more room to the upside.
On the downside, the immediate cushion is seen at the 144.00 mark, below which the 21 DMA could be threatened.
USD/JPY: Daily chart
USD/JPY: Additional technical levels
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