USD/JPY sticks to modest recovery gains, above 106.00 handle post-US data
|The USD/JPY pair built on its steady recovery move and is currently placed comfortably above the 106.00 handle post-US economic releases.
The US Dollar held on to its goodish recovery gains from three-year lows and was being supported by today's data that showed building permits jumped 7.4% in January to a seasonally adjusted annual rate of 1.396 million. Meanwhile, housing starts also recorded a strong growth of 9.7% in January and came in at a seasonally adjusted annual rate of 1.326 million units.
Adding to the positive housing market data, import price index rose 1.0% m-o-m in January, lifting the annual rate to 3.6%. Being the earliest government-released inflation data, the figures reaffirmed expectations about rising inflationary pressure and underpinned the USD demand.
Currently trading around the 106.20-25 region, the pair has now recovered around 75-pips from 15-month lows but remains on track for steep losses for the second consecutive session.
Technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet writes: “The 4 hours chart shows that the price holds well below bearish moving averages, with the 100 SMA currently around 108.65, too far away to be relevant short term. In the same chart, the Momentum indicator lost upward strength well into negative territory, while the RSI aims to recover from oversold readings, currently at 35, all of which maintains the risk toward the downside. Poor US housing data could see the pair resuming its decline, with a break below 106.00 leading to an extension toward the 105.00 region for later in the day.”
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