USD/JPY Current Price: 106.05

  • Sentiment tempered but is far from a significant improvement.
  • Government debt yields and equities extended their declines, although at a moderate pace.
  • USD/JPY posted modest intraday advance, the risk remains skewed to the downside.

The USD/JPY pair posted a modest intraday advance this Thursday, finishing the day a few pips above the 106.00 level. The market’s mood tempered with European indexes ending the day anyway in the red, but with modest losses, and US indexes seesawing between gains and losses to finally close in the red. Government bond yields, however, remained under pressure, and closed lower for a second consecutive day, with the yield on the benchmark 10-year Treasury note settling at 1.52%. In the data front, Japanese figures surprised to the upside, although resulted far from encouraging. According to the official announcement, Industrial Production declined by 3.3% MoM in June and by 3.8% YoY, while Capacity Utilization declined by 2.6%, this last, worse than the 0.2% advance expected.  There are no relevant data scheduled in Japan during the upcoming Asian session.

USD/JPY short-term technical outlook

Low volumes at the beginning of the European session pushed the pair up to 106.77 although it quickly retreated. Now trading around 106.00, the pair has a limited upward potential according to intraday technical readings. In the 4 hours chart, the pair is battling with its 20 SMA, while technical indicators turned lower, although lacking strength, the Momentum above its 100 level but the RSI currently at 48. Still below bearish 100 and 200 SMA, the pair has managed to hold above the 20 SMA throughout the day, so it would take a break below 105.50, a strong static support level, to confirm a bearish extension ahead.

Support levels: 105.50 105.10 104.85

Resistance levels: 106.35 106.80 107.10

View Live Chart for the USD/JPY

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