USD/JPY struggles for a firm direction, stuck in a range around mid-144.00s

USD/JPY continues with its struggle to gain any meaningful traction on the last day of the week.
Retreating US bond yields drags the USD to the weekly low and acts as a headwind for the pair.
The Fed-BoJ policy divergence continues to lend support to the major and favours bullish traders.

Haresh Menghani FXStreet

The USD/JPY pair prolongs its consolidative price move on Friday and remains confined in a four-day-old trading range through the early European session. The pair is currently placed just below mid-144.00s, down less than 0.10% for the day, and is influenced by a combination of diverging forces.

The US dollar surrenders its modest intraday gains and languishes near the weekly low amid a further pullback in the US Treasury bond yields, which, in turn, acts as a headwind for the USD/JPY pair. The UK debt market seems to have stabilized following the Bank of England's intervention for the second day on Thursday. The spillover effect drags the benchmark 10-year US Treasury note away from a 12-year high set earlier this week and weighs on the greenback.

The Japanese yen, on the other hand, draws support from mostly upbeat macro releases. In fact, official data showed that Industrial Production rose 2.7% in August from the prior month, surpassing estimates. A separate reading revealed that Japanese retail sales grew more than anticipated during the reported month. Furthermore, the unemployment in Japan edged down to 2.5% from the 2.6% previous, matching expectations and underpinning the domestic currency.

That said, a modest recovery in the risk sentiment - as depicted by a turnaround in the US equity futures - acts as a headwind for the safe-haven JPY. This, along with a big divergence in the monetary policy stance adopted by the Bank of Japan (dovish) and other major central banks, including the Federal Reserve, supports prospects for the emergence of fresh buying around the USD/JPY pair. Hence, any downtick could still be seen as a buying opportunity.

Market participants now look forward to the release of the Fed's preferred inflation gauge - the US Personal Consumption Expenditures (PCE). Friday's US economic docket also features the Chicago PMI and revised Michigan Consumer Sentiment Index. This, along with the US bond yields, will influence the USD price dynamics and provide a fresh impetus to the USD/JPY pair.

Technical levels to watch

USD/JPY

Overview
Today last price	144.41
Today Daily Change	-0.06
Today Daily Change %	-0.04
Today daily open	144.47

Trends
Daily SMA20	143.29
Daily SMA50	138.66
Daily SMA100	136.05
Daily SMA200	127.82

Levels
Previous Daily High	144.81
Previous Daily Low	144.06
Previous Weekly High	145.9
Previous Weekly Low	140.35
Previous Monthly High	139.08
Previous Monthly Low	130.4
Daily Fibonacci 38.2%	144.53
Daily Fibonacci 61.8%	144.35
Daily Pivot Point S1	144.09
Daily Pivot Point S2	143.7
Daily Pivot Point S3	143.34
Daily Pivot Point R1	144.83
Daily Pivot Point R2	145.2
Daily Pivot Point R3	145.58

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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