USD/JPY slips below 138.50 as DXY surrenders 108.00, BOJ in focus
- USD/JPY has dropped below 138.50 as DXY has picked offers despite the upbeat Retail Sales data.
- A minute recovery in Michigan CSI after a steep fall over the past three months doesn’t warrant a rebound.
- The BOJ is likely to keep its interest rates unchanged this week.
The USD/JPY pair is on the verge of delivering a downside break of the consolidation formed in a narrow range of 138.39-138.66 on Friday. The asset is declining gradually as the US dollar index (DXY) witnessed a steep fall in early trading hours on Monday.
The DXY is dropping sharply and has surrendered the critical support of 108.00 despite the upbeat Retail Sales data and Michigan Consumer Sentiment Index (CSI) released on Friday. The US Retail Sales landed at 1%, higher than the prior release of -0.3% and the estimates of 0.8%. The economic data has remained upbeat on costly fossil fuels, which have soared the energy bills of the households in the US.
Also, a mild recovery in the Michigan CSI was not meaningful to support the DXY bulls. The sentiment data came minutely higher at 51.1 than the estimates of 49.9 and the prior release of 50. A mild recovery has been recorded in the economic data after consecutive three downside figures. However, investors should not consider this recovery a meaningful one until other filters support it.
On the Tokyo front, investors are awaiting the announcement of the interest rate decision by the Bank of Japan (BOJ), which is due on Thursday. The central bank is expected to keep interest rates unchanged as the policymakers are committed to keeping a dovish tone to revive the overall demand in the economy. The BOJ is focused to keep the inflation rate to 2% and seldom higher oil prices are not a decent way to attain desired goals.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
