USD/JPY retreats from high, still holding comfortably above 112.00 handle

Haresh Menghani FXStreet

The greenback recovery against its Japanese counterpart stalled near mid-112.00s handle, with the USD/JPY pair retreating from session peak after the US economic data.

Currently trading around 112.30-25 region, the release of durable goods order data failed to extend additional support to the pair's ongoing recovery move from sub-112.00 level touched during early Asian session on Monday. On Monday, the Commerce Department reported orders for durable goods climbed 1.8% in January while additional details revealed that orders excluding transportation items contracted by 0.2%, perhaps indicating that businesses are awaiting for clarity over the US President Donald Trump's pro-growth economic policies.

Hence, investors seemed reluctant to carry big positions ahead of Trump's first address to Congress on Tuesday, which might trigger a fresh leg of volatility in the FX market and provide impetus for the pair's near-term trajectory.

Meanwhile, a mildly cautious investors' sentiment, in wake of renewed Brexit worries on talks of a second Scottish independence referendum, has been supportive for the Japanese Yen's safe-haven appeal and possibly collaborating towards restricting any sharp recovery for the major.

Up next would be the release of pending home sales data from the US, ahead of Dallas Fed President Robert Kaplan's speech, which would be looked upon for some short-term trading opportunities.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "Technically, the 1 hour chart shows that the 100 and 200 SMAs have gained downward strength well above the current level, while the RSI indicator holds around 50 and the Momentum bounces from its 100 level, still holding below previous daily highs. In the 4 hours chart, indicators have posted modest recoveries from oversold levels, but remain well below their mid-lines, while the price remains far below the 100 and 200 SMAs, indicating that the upward potential remains well-limited."

1 Week
1 Month
1 Quarter

1 Week

Avg Forecast 112.18

33% Bullish
50% Bearish
17% Sideways

Bias Bearish

1 Month

Avg Forecast 114.33

71% Bullish
21% Bearish
7% Sideways

Bias Bullish

1 Quarter

Avg Forecast 115.27

61% Bullish
11% Bearish
28% Sideways

Bias Bullish

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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