USD/JPY Analysis: modestly up on a better market mood

Valeria Bednarik FXStreet

USD/JPY Current price: 106.58

Japan posted a trade deficit for the first time in two months amid falling exports to China.
High yielding assets recovering some ground but far from bullish.
USD/JPY could recover up to 107.20, the 50% retracement of its latest daily decline.

The USD/JPY pair is trading higher in range in the 106.50 price zone, underpinned by a positive market’s mood. Equities trade in the green as government bond yields are on the rise, amid a better perception of the US-China trade relationship.

Also, the Japanese trade balance released at the beginning of the day posted a larger-than-expected deficit of ¥-249.6B in July, as Exports dropped by 1.6% while Imports were down 1.2%. According to the official release, exports to China were down 9.3%, when compared to July 2018, a consequence of the trade war. The US macroeconomic calendar only includes today the auction of short-term bills.

USD/JPY short-term technical outlook

The USD/JPY pair is trading just below the 38.2% retracement of its latest daily slide, offering a neutral-to-positive stance in the short-term, and according to the 4 hours chart. The 20 SMA has lost strength upward but remains below the current level, while the 100 SMA continues heading lower above the current level. Technical indicators lack directional strength but hold within positive levels. The mentioned Fibonacci resistance comes at 106.65, the level that the pair needs to clear to be able to extend gains toward the 107.20 price zone.

Support levels: 106.05 105.60 105.25

Resistance levels: 106.65 106.95 107.20

View Live Chart for the USD/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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