USD/JPY Forecast: Range shrinks, breakout imminent?

Valeria Bednarik FXStreet

USD/JPY Current price: 110.37

Japan’s July Jibun Bank Manufacturing PMI contracted to 52.2 from 52.4 in June.
Us Treasury yields recovered from an early dip, ended the day unchanged.
USD/JPY is neutral in the near-term, bulls retain control.

The USD/JPY pair held within familiar levels on Monday, ending the day with modest losses in the 110.30 price zone. The pair seesawed between gains and losses, following the lead of US government bond yields. USD/JPY fell as the yield on the 10-year US Treasury note fell to an intraday low of 1.22%. Both recovered during US trading hours, with the latter settling at 1.28%.

Japan published the preliminary estimate of the July Jibun Bank Manufacturing PMI, which contracted by more than anticipated, falling to 52.2 from 52.4 in June. On Tuesday, the country will publish the June Corporate Service Price Index, foreseen at 1.3% from 1.5% previously, while BOJ’s Governor Haruhiko Kuroda will participate in an online event.

USD/JPY short-term technical outlook

The USD/JPY pair is neutral-to-bullish. The 4-hour chart shows that the price converges with all of its moving averages, confined to a tight 10 pips’ range, reflecting the absence of directional strength but also an indication of a possible directional breakout in the near-term. Additionally, the Momentum indicator advances within positive levels while the RSI consolidates at around 55, favoring another leg north mainly on a break above 110.70.

Support levels: 110.20 109.80 109.40

Resistance levels: 110.70 111.10 111.50

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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