USD/JPY Forecast: Recovery continues despite limited momentum
USD/JPY Current Price: 107.92
- Japan Tankan Large Manufacturing Index foreseen in Q2 at -31 from -8 in the previous quarter.
- Comments from Federal Reserve’s Powell played against safe-haven currencies.
- USD/JPY trades near 108.00 could extend its advance in the upcoming sessions.
The USD/JPY pair reached a fresh 3-week high of 107.97, ending the day not far below the level. A better market mood after cautiously optimistic comments from US Fed’s Powell and the positive tone of equities underpinned the pair, although gains were limited by absent dollar’s demand. US Treasury yields, in the meantime, posted modest intraday advances, with the yield of the 10-year note up to 0.66%.
Japan published the May Unemployment Rate, which surged to 2.9%, while Industrial Production in the same month plunged 8.4% MoM and fell 25.9% when compared to a year earlier. Housing Starts, however, were down 12.3% vs. -15.9% expected. The country will publish the June Consumer Confidence Index this Wednesday, foreseen at 20.9 from 24 in the previous month. It will also publish the Tankan Large Manufacturing Index, seen in Q2 at -31 from -8 in the previous quarter.
USD/JPY short-term technical outlook
The USD/JPY pair has reached the 50% retracement of its June decline, pressuring the level ahead of the Asian opening. In the short-term, the risk is skewed to the upside, although the momentum is still limited. In the 4-hour chart, the pair has spent the day above all of its moving averages, with the 20 SMA advancing above the 100 SMA. Technical indicators, in the meantime, remain near their daily highs, although without directional strength.
Support levels: 107.50 107.10 106.70
Resistance levels: 107.95 108.30 108.65
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.
