USD/JPY Current Price: 107.22
- Japan’s May industrial production contracted by 8.9% MoM and fell 26.3% yearly basis.
- The Bank of Japan will likely downgrade its growth and inflation forecast.
- USD/JPY continues to trade uneventfully around the 107.00 level.
The USD/JPY pair is ending Tuesday with modest losses in the 107.20 price zone, retreating from an intraday high of 107.43 achieved during London trading hours. The greenback enjoyed some temporal demand at the beginning of the day amid the poor performance of global equities, although a bounce in these lasts during US trading hours pushed the pair away from intraday highs. Japanese data also weighed on the local currency, as the country’s May industrial production contracted by 8.9% when compared to April, and fell 26.3% yearly basis. Capacity Utilization in the same month was down by 11.6%.
The Bank of Japan is having a monetary policy meeting this Wednesday, but policymakers are widely anticipated to maintain a wait-and-see stance. Further easing seems unlikely after the central bank approved a stimulus package of 117 trillion yen. The interest rate is expected unchanged at -0.1%, although revisions to growth and inflation forecasts are likely.
USD/JPY short-term technical outlook
The USD/JPY pair retains its neutral stance in the short term, trading within directionless moving averages in the 4-hour chart. Technical indicators in the mentioned time-frame have lost directional strength, turning flat just above their mid-lines. The pair has multiple intraday highs from these last few days in the 107.70 price zone that need to be cleared to see it gather additional momentum. Below 106.95, on the other hand, the pair will likely spend Wednesday in the red.
Support levels: 106.95 106.60 106.20
Resistance levels: 107.40 107.75 108.10
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