USD/JPY rises back above 140.00 following US data

The USD strengthened on Thursday and trades with gains against most of its rivals, including the EUR, GBP, CHF and JPY. Lower Initial Jobless Claims fueled a rise in US bond yields and allowed the USD – measured by the DXY index – to rise to its highest level in seven days at 100.80.

Investors assess mid-tier US data. All eyes on Japan’s Inflation data

The US reported mid-tier data. On the negative side, the Philadelphia Federal Reserve Manufacturing survey showed worrying results as it index declined more than expected, coming in at -13.5 vs the consensus of -10. In addition, following Wednesday’s soft Housing data, Existing Home Sales from the US from June also showed weakness. The figure showed a contraction of 3.3% MoM in June with a 4.16M decrease.

That being said, investors are weighing more the lower-than-expected Initial Jobless Claims figures for the second week of July. The number of people filing for unemployment benefits came in at 228,000 vs the 242,000 expected and also below the previous figure of 237,000.

US Treasury yields advanced across the board. The 2-year yield displays nearly 2% gains and stands at 4.88%, while the 5 and 10-year yields rose to 4.10% and 3.84% showing more than 2% increase. Ahead of next week's Federal Reserve (Fed) meeting, markets have discounted mainly a 25 basis point increase while the odds of another hike past July continue to be low according to World Interest Rate Probabilities (WIRP) 

On the Japanese side, investors will eye Japanese inflation figures from June. The headline Consumer Price Index (CPI) is expected to have accelerated to 3.5% YoY in June, while the Core measure to decelerate slightly to 4.2%.

USD/JPY Levels to watch

The daily chart indicates that the bulls are gaining ground, marching towards positive territory. As for now, the Relative Strength Index (RSI) points noth but remains in negative territory while the Moving Average Convergence Divergence (MACD) prints lower red bars, indicating at a fading selling momentum. 

Resistance levels: 140.70, 141.00, 141.95 (20-day Simple Moving Average)
Support levels: 140.00, 139.60,139.00.

USD/JPY Daily chart