USD/JPY: Correction from six-week highs stalls near 132.50, US data eyed

USD/JPY is in the red for the first time this week, back below the 133.00 level.
US Dollar benefits from risk aversion but US Treasury yields remain a drag.
Bearish 50DMA support is in sight amid the pullback from multi-week highs.

Dhwani Mehta FXStreet

USD/JPY is on a corrective downside journey so far this Wednesday, witnessing losses for the first time this week. The pair is retreating from fresh six-week highs of 133.31 reached a day before, trading under 133.00 amid broad risk aversion.

Hotter-than-expected US Consumer Price Index (CPI) data combined with hawkish commentary from US Federal Reserve (Fed) officials have spooked investors, negatively impacting global stocks. The rush to safety in the US bond market is sending the US Treasury bond yields lower, in turn, weighing down on the USD/JPY pair.

Further, expectations that the new Bank of Japan (BoJ) Governor Kazuo Ueda could likely abandon the central bank’s yield curve policy are lending support to the Japanese Yen.

However, the renewed demand for the US Dollar, amid dominating risk-off flows, is fuelling the latest uptick in the spot. All eyes now turn toward the US Retail Sales data due later in the NA session for fresh trading impetus.

From a short-term technical perspective, USD/JPY is reattempting the 133.00 level, having found support near the 132.50 psychological level.

The 14-day Relative Strength Index (RSI) is edging higher above the midline, suggesting that the recovery momentum remains well in place.

Buyers need to take out the six-week high at 133.31 to extend the recent uptrend toward the static resistance at 133.50.

On the flip side, a sustained move below the 132.50 demand area will put the 50-Daily Moving Average (DMA) support at 132.03 under threat.

USD/JPY: Daily chart

USD/JPY: Additional technical levels

USD/JPY

Overview
Today last price	132.91
Today Daily Change	-0.13
Today Daily Change %	-0.10
Today daily open	133.04

Trends
Daily SMA20	130.51
Daily SMA50	132.1
Daily SMA100	137.96
Daily SMA200	136.85

Levels
Previous Daily High	133.32
Previous Daily Low	131.5
Previous Weekly High	132.91
Previous Weekly Low	129.81
Previous Monthly High	134.78
Previous Monthly Low	127.22
Daily Fibonacci 38.2%	132.62
Daily Fibonacci 61.8%	132.19
Daily Pivot Point S1	131.92
Daily Pivot Point S2	130.8
Daily Pivot Point S3	130.11
Daily Pivot Point R1	133.74
Daily Pivot Point R2	134.43
Daily Pivot Point R3	135.55

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD holds above 1.3350 with the 200-day SMA capping gains

The British Pound appreciates against the US Dollar on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average. This is a popular indicator, which lies a few pips below 1.3400 and has been capping Pound’s recovery over the last two weeks.

EUR/USD consolidates gains above 1.1400

Following an earlier move to multi-day peaks past 1.1460, EUR/USD has now slipped back toward the low 1.1400s as the NA session draws to a close on Tuesday. Declining bets for potential Fed tightening later in the year coupled with poor US CPI data hurt the US Dollar, lending fresh legs to the pair and the broader risk-linked universe. Moving forward, the release of US PPI and Chair Warsh’s second testumony should keep investors entertained on Wednesday.

Gold battles to recover the $4,100 mark

Gold reverses the recent weakness and reclaims the area beyond the key $4,000 mark per troy ounce on Tuesday. The precious metal’s recovery picks up pace and approaches the $4,100 region following the Greenback’s decline and comments from the Fed’s Warsh.

Bitcoin, crypto market post gains following weaker US inflation reading

The crypto market posted gains on Tuesday following the release of the US Consumer Price Index (CPI) report for June, which showed that inflation cooled below market expectations. According to the US Bureau of Labor Statistics, annual inflation slowed to 3.5% in June from 4.2% in May, marking its first decline in five months and coming in below the consensus forecast of 3.8%.

Fed Chair Warsh reaffirms they will deliver price stability

While testifying on the Semiannual Monetary Policy Report before the US House Financial Services Committee, Fed Chairman Kevin Warsh reiterated that the Fed is making a commitment on price stability and the goal of 2% inflation.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.