USD/JPY Current price: 111.71
- Japanese data was mixed, with Tokyo inflation up but factory output collapsing.
- US advanced Q1 GDP foreseen up by 2.1% vs. the previous quarter 2.2%.
The USD/JPY pair consolidates at the lower end of its weekly range, unchanged after a batch of mixed Japanese data, as speculative interest waits for US advanced Q1 GDP to be out later today, to decide whether or not to keep buying the greenback. In Japan, Tokyo inflation surprised to the upside, up by 1.4% YoY in April, much better than the 0.8% expected, while the core measure ex-food rose by 1.3%, above the previous 1.1% also surpassing the market's forecast. Unfortunately, factory output fell in March, with preliminary March Industrial Production down 0.9% MoM and falling by 4.6% YoY, fueling speculation of a steeper economic contraction in the worlds' third-largest economy. The unemployment rate in the country increased by more than expected, up to 2.5% in March.
As said, markets are in wait-and-see mode ahead of the US Q1 GDP. The first estimate of the country's growth is usually the one having a larger impact on the market, so action is granted. Previous quarterly growth was of 2.2%, and expectations for these first three months of the year are of a 2.1% advance. The forecast was revised from an estimate of 1.8% just last week, while other Fed's estimates point for even better figures. The market is ready for a positive surprise, not for a downbeat number. A reading above 2.2% will surely boost the greenback, while below 1.8% will be a trigger to take profits out of the table ahead of the weekend.
The daily chart for the pair shows that, for a second consecutive day, it´s battling to hold above the 200 DMA, and around the 20 DMA, with technical indicators hovering in neutral territory. In the shorter term, and according to the 4 hours chart, the pair also offers a neutral stance, stuck around the 100 SMA and between the 20 and 200 SMA. Moving averages are confined to a tight range and directionless, while technical indicators aim marginally higher within negative ground, giving no clear clues on what's to come.
Support levels: 111.60 111.25 110.90
Resistance levels: 112.15 112.50 112.85
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