USD/JPY Forecast: Consolidating gains just below 110.00

Valeria Bednarik FXStreet

USD/JPY Current price: 109.89

Japanese data missed expectations, indicating a steeper than anticipated economic contraction.
Markets are in a risk-on mood amid renewed hopes for an economic comeback.
USD/JPY trades near the 110.00 level and has room for a bullish breakout.

The USD/JPY pair trades near a daily high of 109.95, maintaining its positive stance, despite receding demand for the American dollar. Financial markets’ mood is upbeat amid renewed hopes for an economic comeback following solid US macroeconomic data released on Thursday. The positive sentiment was boosted by news indicating that the White House is set to propose a $ 6 trillion budget plan.

Speculative interest is now waiting for US data to confirm the ruling optimism. The country will publish April Personal Income and Personal Spending, and Personal Consumption Expenditures for the same month. The Federal Reserve’s favorite inflation measure, the core PCE price index, is seen at 2.9% YoY. The US will also release the Michigan Consumer Sentiment Index for May, foreseen at 82.9.

Japanese data released at the beginning of the day failed to impress. The Unemployment Rate rose to 2.8% in April, while Tokyo inflation printed at -0.4% YoY in the same month.

USD/JPY short-term technical outlook

The USD/JPY pair is trading in the 109.80 price zone, overbought near-term but without signs suggesting an upcoming decline. The 4-hour chart shows that technical indicators have barely retreated from extreme readings, consolidating near their recent highs. The 20 SMA has accelerated north, crossing above the longer ones, all of them below the current level. The pair needs to clear 110.10 to be able to extend its advance heading into the weekend.

Support levels: 109.70 109.30 108.90

Resistance levels: 110.10 110.45 110.80

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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