USD/JPY Current price: 109.84

  • Markets are on risk-on mode after the Fed show no rush to taper.
  • The US will publish Q2 Gross Domestic Product, seen at 8.6%.
  • USD/JPY consolidates losses below 110.00 could fall further.

The USD/JPY pair consolidates around 109.80 in the Fed’s aftermaths. The greenback weakens across the board, although the solid performance of global indexes prevents the JPY from appreciating. The US central bank left rates and the massive stimulus programs unchanged and repeated that heating inflation would likely be temporary. On tapering, Chairman Jerome Powell made it clear that they are in no rush to retrieve monetary support.

Asian and European indexes are firmly up, boosting US futures. Government bond yields, in the meantime, hover around their Wednesday’s closing levels, with the yield on the 10-year US Treasury note stable at around 1.26%.

The focus now shifts to the US and the release of the preliminary estimate of Q2 Gross Domestic Product. The economy is expected to have grown at an annualized pace of 8.6%, following 6.4% in the first country. The positive headline could be overshadowed by the record coronavirus contagions in the country and some restrictive measures imposed as a result.

USD/JPY short-term technical outlook

The USD/JPY pair is neutral-to-bearish according to intraday readings. The 4-hour chart shows that the pair remains below all of its moving averages, with the 20 SMA accelerating south below the longer ones. Technical indicators lack directional strength within negative levels. Chances of a directional movement are limited, although the decline could accelerate on a break below 109.57, the weekly low.

Support levels: 109.55 109.10 108.70

Resistance levels: 110.10 110.45 110.90  

View Live Chart for the USD/JPY


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