- USD/JPY finally broke with the 145.00 resistance and rose near 145.55, tallying a six-day winning streak.
- A cautious market mood supported the USD—eyes on Retail Sales from July and FOMC minutes.
- Eyes on preliminary Q2 GDP figures from Japan to be released on Tuesday.
At the start of the week, the USD/JPY rose to its highest level since November 10, 2022, mainly driven by a cautious market mood and a stronger USD. In addition, after jumping above the key resistance of 145.00, there are no signs of the Bank of Japan (BoJ) of a stealth intervention which leaves the JPY vulnerable.
On the Japanese side, Tuesday will witness the release of the Q2 Gross Domestic Product (GDP) preliminary report, with projections anticipating a rise at a yearly rate of 3.1%. Nonetheless, it's worth noting that the Bank of Japan (BoJ) has yet to show any indications of pivoting away from its accommodative monetary approach or engaging in market interference to manage the depreciation of the JPY. This lack of action could fuel an avenue for additional negative movement for the pair. However, if the Japanese economy shows signs of recovery, the BoJ might consider a pivot in its policies which could limit the Yen's losses.
On the US side, Retail Sales from July will be released on Tuesday and are expected to have expanded at a monthly pace of 0.4% from its previous figure of 0.2%. In addition, the Federal Open Market Committee (FOMC) minutes from the last July’s meeting will be closely watched by investors on Wednesday to continue placing their bets for the next Federal Reserve (Fed) decisions. As for now, according to the CME FedWatch tool, markets are confident that the Fed will skip in September while the odds of a 25 basis point (bps) hike in November rose near 40%.
USD/JPY Levels to watch
The daily chart analysis indicates a bullish outlook for the USD/JPY in the short term. The Relative Strength Index (RSI) is above its midline in positive territory, with a positive slope, aligning with the positive signal from the Moving Average Convergence Divergence (MACD), displaying green bars, and reinforcing the strong bullish sentiment. Moreover, the pair is above the 20,100,200-day Simple Moving Averages (SMAs), implying that the bulls retain control on a broader scale.
In addition, a distinct bullish dominance over sellers is evident on the four-hour chart, with indicators displaying a strong buying momentum.
Support levels: 145.00, 144.70, 144.00.
Resistance levels: 145.70, 146.00, 146.50.
USD/JPY Daily chart
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