USD/JPY Forecast: Losing its bullish momentum but not far from its weekly high

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.58

The Bank of Japan will have an emergency monetary policy meeting this Friday.
Manufacturing output in Japan contracted further in May, with the PMI down to 38.4.
USD/JPY holding well above the 107.00 level, but bulls losing interest.

The USD/JPY pair recovered the ground lost on Wednesday during the last few sessions, ending the day at around 107.60. The pair peaked at 107.84 during Asian trading hours, later easing on the back of rising risk aversion. Japanese data released at the beginning of the day was mixed, as the April Merchandise Trade Balance came in at ¥-930.4B much worse than anticipated. Exports were down by 21.9% while imports decreased by 7.2%.

Also, the preliminary estimate of the Jibun Bank Manufacturing PMI came in at 38.4 in May after printing at 41.9 in April, indicating a sharper drop in output and hinting a steeper downturn ahead. On a positive note, the government decided to lift the state of emergency in three prefectures this Thursday, amid decreasing coronavirus cases.

This Friday, the BOJ will have a special monetary policy meeting, in which they will probably announce another set of measures to support the local economy. The country will also publish its National inflation figures for April. The annual CPI ex-fresh food is foreseen at -0.1% from 0.4% previously.

USD/JPY short-term technical outlook

The USD/JPY pair is losing its bullish stance, despite holding near its recent highs. The 4-hour chart shows that the pair is barely holding above its 20 SMA, which maintains its bullish slope above the larger ones. The Momentum indicator, in the meantime, crossed its mid-line into negative territory, while the RSI is directionless at around 55. The pair would need to break below 107.30 to be able to extend its slide this Friday.

Support levels: 107.30 106.90 106.65

Resistance levels: 108.00 108.40 108.80

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.

EUR/USD looks sidelined around 1.1850

EUR/USD remains on the back foot, extending its bearish tone and sliding towards the 1.1850 area to print fresh daily lows on Monday. The move lower comes as the US Dollar gathers modest traction, with thin liquidity and subdued volatility amplifying price swings amid the US market holiday.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.