USD/JPY upside bias intact but limited by 111.00
|- Dollar gains modestly versus yen despite risk aversion but supported by modestly higher US yields.
- USD/JPY heads for fifth daily gain in-a-row and highest close since late-May.
The USD/JPY pair is rising for the fifth consecutive day but still remains unable to extend the move above 111.00. The greenback is among the top performers on Monday supported by US data. The greenback peaked at 111.05 but then retreated finding support at 110.65. The bearish bias remains intact but the strength of the rally appears to be fading.
US data showed higher than expected readings in the ISM Manufacturing and also on the Construction Spending report. On Tuesday, May Factory Orders is due while on Wednesday, Wall Street will remain closed for Independence Day in the US. On Thursday the key event will be the minutes from the latest FOMC meeting and on Friday the NFP report.
Regarding US stocks, the Dow Jones was falling 0.20% but the NASDAQ was up 0.34%. Latin American markets and EM currencies were under pressure amid risk aversion, supporting the yen and the US Dollar.
USD/JPY Technical outlook
“The 4 hours chart shows that the pair is holding above its 100 and 200 SMA, with the shortest aiming modestly higher in the 110.20 region. In the mentioned chart, the Momentum indicator eases in positive territory while the RSI holds directionless around 58, leaving a neutral-to-bullish stance in the short-term”, said Valeria Bednarik, Chief Analyst at FXStreet.
A breakthrough 110.05 should lead to a test of 111.39, May monthly high, ahead of the 111.70/80 region, while below 110.55, a bearish extension could be expected for this Tuesday, according to Bednarik.
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