USD/JPY Forecast: Waiting for clues from yields

USD/JPY Current price: 106.28

• A holiday in the US kept the USD/JPY pair confined to a tight range.
• Japan’s GDP expected to be downwardly revised in Q2 TO -8.1% from -7.8%.
• USD/JPY is trading above 106.00, but there are no signs of upcoming advance.

The USD/JPY pair spent the day hovering around 106.20, ending the day with modest gains. Without activity around US government bond yields, the pair was unable to move. Data coming from Japan was mixed, as the country published the preliminary estimate of July Leading Economic Index, which improved to 86.9, better than the 84.6 expected. The Coincident Index for the same period, however, came in at 76.2, missing expectations of 79.

The macroeconomic calendar in Japan will be quite busy this Tuesday, as the country will publish the July Current Account, and the final reading of Q2 GDP, foreseen at -8.1% from a previous estimate of -7.8%. The country will also unveil the preliminary estimate of August Machine Tool Orders previously at -31.1%. Finally, the country will release the August Eco Watchers Survey on the current situation, foreseen at 33.3 from 41.1 in the previous month.

USD/JPY short-term technical outlook

The short-term picture for the USD/JPY pair is  neutral, as the pair has been confined to a tight intraday range for the third consecutive journey. In the 4-hour chart, the pair is resting above its 20 SMA, which lost strength upward but holds above the larger ones. Technical indicators, in the meantime, head nowhere around their midlines. The pair needs to advance beyond 106.70 to have chances of extending its advance during the upcoming sessions.

Support levels: 105.90 105.50 105.10

Resistance levels: 106.35 106.70 107.10

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