USD/JPY analysis: trapped by fears, range set to continue

Valeria Bednarik FXStreet

USD/JPY Current price: 110.91

Japanese trade deficit widened to ¥231.2B, amid lesser exports, soaring imports.
Softer US data and subdued T-yields capped the upside for USD/JPY.

The USD/JPY pair managed to close the day with gains but was unable to regain the 111.00 figure, despite a short-lived spike above the level, as a cautious stance prevailed among speculative interest. The pair was trapped in broad dollar's intraday weakness and solid gains in US equities on the back of upbeat earnings reports. Japanese data was sort of discouraging, added to yen's decline, as the July´s Merchandise Trade Balance posted a larger-than-expected deficit of ¥231.2B, a result of a small increase in exports of just 3.9%, and a large one in imports which soared 14.6%. US soft macroeconomic releases capped the upside for the pair, alongside with Treasury yields, which retreated in pre-opening operations and held below Wednesday's closing levels. The 4 hours chart reflects that markets players are unwilling to move away from the safe-haven yen, but there's a certain balance in it amid dollar also considered a refugee. Sellers were quick around a flat 100 SMA, offering a dynamic resistance around 111.20, while despite posting modest recoveries, technical indicators are still stuck to neutral readings. The pair would need to clear the 111.50 price zone to be able to extend its advance with a firmer upward potential.

Support levels: 110.45 110.10 109.80

Resistance levels: 111.20 111.50 111.85

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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