USD/JPY eases to 112.30, looks to make the highest weekly close of 2018

  • US Dollar Index headed for a flat daily close near 94.50.
  • US T-bond yields extend losses in the session.
  • Wall Street trades mixed ahead of the closing bell.

After adding nearly 200 pips on Wednesday and Thursday, the USD/JPY pair staged a correction on Friday as the greenback failed to preserve its strength in the last session of the week. As of writing, the pair was trading at 112.32, losing 20 pips, or 0.18%, on the day. Despite today's fall, however, the USD/JPY pair remains on track to make its highest weekly close of the year.

Today's data from the United States showed that the Consumer Sentiment Index released by the University of Michigan eased to 97.1 in July in its preliminary reading to fall short of the market expectation of 98.2. The publication revealed that the Trump administration's trade policy was continuing to cause concerns among consumers. The US Dollar Index, which lost its bullish momentum after finding a short-term resistance at 95, eased to 94.50 to head for a flat daily close.

In the meantime, the 10-year T-bond yield on Friday lost nearly 1% to drop to its lowest level of the week %2.827 to put an extra pressure on the pair. Although there were no clear catalysts behind that drop, news of 12 Russian spies getting indicted by the U.S. Justice Department with accusations of hacking the Democratic National Committee and the Clinton presidential campaign ahead of Putin-Trump summit on Monday may have weighed on the market sentiment.

Technical levels to consider

The pair could encounter the first technical resistance at 112.75/80 (Jan. 10 high/daily high) ahead of 113.40 (Jan. 8 high) and 113.75 (Dec. 12 high). On the downside, supports could be seen at 112.00/111.95 (psychological level/Jul. 12 low), 110.75 (Jul. 11 low) and 110 (psychological level).

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