USD/JPY Forecast: Consolidating gains, bulls hesitate

Valeria Bednarik FXStreet

USD/JPY Current price: 105.52

A rally in equities fell short of boosting USD/JPY, instead mute alongside Treasury yields.
Japan to publish this Tuesday Tokyo’s inflation, expected at 0.4% YoY.
USD/JPY is holding on to its latest gains but needs a good reason to advance.

The USD/JPY pair has consolidated its latest gains this Monday, ending the day little changed in the 105.50 price zone. The better market mood that played against the American currency did not help the Japanese yen, as speculative interest preferred high-yielding assets. Equities rallied worldwide, although government bond yields remained depressed, somehow limiting the upside for the pair.

In the data front, Japan published at the beginning of the day its July Leading Economic Index, which came as expected at 86.9. The Coincident Index for the same month printed 76.2, also matching the market’s forecast. During the upcoming Asian session, the country will release September Tokyo inflation data. The yearly CPI is foreseen at 0.4%, better than the previous 0.3%. The core reading, excluding fresh food prices, is seen unchanged at -0.3% YoY.

USD/JPY short-term technical outlook

From the technical point of the USD/JPY pair remains neutral. It is trading above the 61.8% retracement of its latest daily decline, but below its previous high at 105.69. The 4-hour chart shows that the pair is barely holding above its 20 and 100 SMA, with the shortest about to cross above the larger one, which somehow skews the risk to the upside. Technical indicators, however, remain directionless. The pair needs to advance the mentioned high to be able to extend its rally towards 106.26, September 11 daily high.

Support levels: 105.10 104.65 104.30

Resistance levels: 105.70 106.25 106.60

View Live Chart for the USD/JPY

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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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