USD/JPY struggles to find direction on weak USD and high risk appetite
|Following a sharp fall to 111.85 in the late Asian session, the USD/JPY pair recovered above the 112 handle and went into a consolidation phase. As of writing, the pair is trading at 112.15, losing 0.15% on the day.
Speaking at the ECB Forum on Central Banking in Portugal, BoJ Governor Kuroda said that although the investment in the wage growth has been slow, corporate cash and deposits have continued to increase to reach 50% of the nominal GDP. However, his comments failed to provide any fresh catalysts for the pair as he didn't touch on the current state of the economy nor the short-term outlook for the monetary policy.
On the other hand, despite the uninterrupted selling pressure seen on the greenback, the pair couldn't gather any bearish momentum as the major equity indexes in the U.S. gained traction after a flat start to the day, making the safe haven JPY less desirable. At the moment, both the Dow Jones Industrial Average and the S&P 500 indexes gain nearly 0.7% while the US Dollar Index is at 95.80, losing 0.4%.
Moreover, the positive correlation with the EUR/JPY pair, which consolidates near its 15-month highs, continue to limit the losses seen in the USD/JPY pair.
The economic calendar won't be featuring any data that could impact the price action in the remainder of the session. Retail Trade data from Japan in the early Asian session will be looked upon for fresh impetus.
Technical analysis
The 200-DMA located at 112.35 has formed a strong resistance in the short-term, and unless the pair makes a daily close above that level, it could have a tough time gathering momentum. 113 (psychological level) and 113.75 (May 16 high) could be seen as next resistances. On the downside, the supports align at 111.50 (50-DMA/100-DMA), 110.80 (20-DMA) and 110 (psychological level).
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