USD/JPY: little response so far, in need of a firmer catalyst

Valeria Bednarik FXStreet

USD/JPY Current price: 108.59

Better market mood barely enough to keep the USD/JPY pair afloat.
Japanese Machine Tool Orders fell a whopping 27.3% in May, adding to concerns about the country's financial health.

Having been unable to overcome the 108.65 Fibonacci resistance Monday, the USD/JPY pair eased during the last two sessions, falling to 108.31, where another Fibonacci level offered support. The pair bounced amid prevailing positive mood, as equities advanced in Asia and Europe, while US Treasury yields extended their gains, although modestly. Overnight, Japan released May's Money Supply, which increased 2.7% YoY, and Machine Tool Orders for the same month, which plunged a whopping 27.3% following a 33.4% fall in April.

The pair bounced from the mentioned low, once again struggling to surpass the mentioned Fibonacci resistance in the 108.60 price zone. The US calendar will be quite light, with minor data scheduled for today that hardly can affect sentiment-related trading. The country will release the May NFIB Business Optimism Index, and Producer Prices for the same month, seen up by 0.2% MoM and by 2.3% YoY. Later in the American afternoon, the country will publish the June IBD/TIPP Economic Optimism Index, previously at 58.6.

The USD/JPY pair practically filled the weekly opening gap, giving bulls a slightly encouraging signal, although an upward extension through the mentioned critical resistance area is needed to confirm further gains ahead. Technical readings in the 4 hours chart offer a neutral-to-positive stance, as the price holds above its 20 SMA, which have lost its bullish strength and stands pat a couple of pips above the mentioned Fibonacci support, while the Momentum indicator eases within positive levels and the RSI heads nowhere around 53. The risk will turn to the downside only with a break below 107.90, unlikely in the short-term.

Support levels: 108.25 107.90 107.55

Resistance levels: 108.90 109.30 109.55

View Live Chart for the USD/JPY

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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