USD/JPY analysis: steady around 111.00 ahead of Japanese Q2 GDP

USD/JPY Current price: 110.99

  • Japanese Q2 GDP and US inflation to be a make it or break it for bears.
  • Dollar´s broad strength offset by slipping T-yields when it comes to USD/JPY.

The USD/JPY pair fell to 110.70 at the beginning of the day, a fresh weekly low, bouncing from the level to be capped again by selling interest aligned around the 111.20 level. The lack of relevant macroeconomic releases combined with risk-related political headlines, which have benefited only partially the safe-haven yen, keep the pair within familiar levels, although the risk remains skewed to the downside, as the Japanese currency is finding support is slipping US Treasury yields, with the yield on the benchmark 10-year Treasury note down to 2.93%.  Japanese data released early Thursday was generally discouraging, as Machinery Orders posted a larger-than-expected decline of -8.8% in June, well below the expected -1.3%, leaving the annual reading up at 0.3% vs. the expected 0.5% The Machine Tool Orders preliminary for July, however, came above the previous month reading, advancing from 11.4% to 13.0%. The country will start Friday offering preliminary Q2 GDP figures, seen bouncing from the -0.2% printed in Q1 to 0.3%. The annualized reading is foreseen at 1.4% after the -0.6% from the previous quarter. The pair trades around the 111.00 figure, and the 4 hours chart shows that the 100 SMA continues heading south above the current level and above the 200 SMA, indicating an increasing downward potential without confirming it. Technical indicators in the mentioned chart have recovered from their daily lows, but are unable to define a direction, hovering right below their midlines. US inflation could be a make it or break it for bears, who can't seem to be able to fully take over the pair.

Support levels: 110.55 110.20 109.80

Resistance levels: 111.20 111.60 111.90

View Live Chart for the USD/JPY

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