USD/JPY turns neutral, back around 111.25 ahead of US GDP

Haresh Menghani FXStreet

The USD/JPY pair recovered early lost ground to sub-111.00 level and is now holding in neutral territory around the 111.20-25 region.

Earlier today, the pair came under some renewed selling pressure amid a fresh wave of global risk aversion trade and stalling post-FOMC US Dollar recovery.

• Dollar Index - Shallow recovery runs out of steam ahead of US GDP release

The slide, however, turned out to be short-lived and once again caught some fresh buying interest as investors seemed resilient to initiate/carry aggressive bets ahead of the advance US Q2 GDP print. The US economy is expected to register a growth of 1.3% in the three months to June, well below 1.9% growth recorded in the previous quarter.

• US: GDP back on trend? - ING

Against the backdrop of Wednesday's perceived dovish Fed decision, any further disappointment would trigger a fresh leg of USD weakness and turn the pair vulnerable to head back towards retesting monthly lows touched at the beginning of this week.

Later during the NY trading session, Minneapolis Fed President Neel Kashkari's speech would also be looked upon for some trading impetus.

Technical levels to watch

Bulls would be eyeing for a sustained move beyond mid-111.00s, above which a fresh bout of short-covering could lift the pair back towards the very important 200-day SMA near the 112.00 handle en-route 112.30-35 horizontal zone.

On the flip side, sustained weakness below the 111.00 handle, leading to a subsequent break through 110.80 horizontal support, would turn the pair vulnerable to extend the slide towards 110.30-25 support ahead of the key 110.00 psychological mark.

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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