USD/JPY eases from intraday high, still beyond 107.50, on upbeat Japan data dump

USD/JPY drops to 107.66 after headline data from Japan pleased the yen buyers during the early Asian session on Friday. Even so, the yen keeps the recoveries from the previous day’s low near 107.57/58. The reason for the mixed performance could be traced from upbeat stock markets and fears of the US-China tussle.

Japan’s Tokyo Consumer Price Index (CPI) for May rises beyond 0.2% YoY printed in April to 0.4% whereas the Tokyo CPI ex Fresh Food grew above -0.2% forecast and -0.1% prior by +0.2% mark. Further, the Unemployment Rate dropped to 2.6% from 2.7% forecasts and 2.5% earlier whereas Job/Applicants Ratio slipped below 1.33 forecast to 1.32. Furthermore, Japan’s April month Retail Sales also came in better than -11.5% to -9.6% However, the Preliminary reading of April month Industrial Production shrank more than -5.1% forecast to -9.1%.

Read: Tokyo area May Core CPI +0.2% YoY smashes estimates of ‐0.2％

Given the mostly upbeat data from Japan, the yen managed to extend its latest U-turn from 107.72. Other than the welcome statistics, fears of the escalations in the US-China tussle, backed by US President Donald Trump’s calling of China conference at 18:00 GMT on Friday, also weigh on the pair.

On the contrary, global equities cheer signals of further easing from the central bank policymakers from the US, Europe and the UK amid optimism surrounded by economic restart after the coronavirus (COVID-19)-led lockdowns. Furthermore, hopes of the cure to the virus and soft US dollar also please the sellers.

Against this backdrop, US 10-year Treasury yields declined two basis points to 0.685% whereas S&P 500 Futures fail to keep the bulls happy as its key benchmark did on Wall Street the previous day.

Moving on, Japan’s House Starts and Consumer Confidence, followed by the US Chicago Purchasing Managers’ Index and Michigan Consumer Sentiment Index, will entertain the traders on Friday. However, the major attention will be given to US President Trump’s conference for clues of fresh sanctions after the US House of Representatives has already passed a bill to punish Chinese diplomats involved in the Xinjiang issue.

Technical analysis

USD/JPY buyers keep struggling to clear 108.05/10 area comprising multiple highs marked since April-19, not to mark 200-day SMA around 108.30/35 as additional strong resistance. As a result, sellers’ may take entries if the pair drops below an ascending trend line from May 13, near 107.40, could recall sellers targeting the mid-month low near 106.75 and the monthly bottom around 106.00.