USD/JPY Analysis: looking to stabilize above 108.00
|USD/JPY Current price: 108.14
- USD stronger amid central banks’ imbalances being priced in.
- Light macroeconomic calendar leaving sentiment in control of currencies.
- USD/JPY pair needs now to extend gains past 108.40 to gain bullish traction.
The American dollar is the strongest in this second day of the week, resuming its advance as the market asses that the US Central Bank will likely be the most conservative with the monetary policy from now on, while the rest of the major central banks will probably take more aggressive measures. The USD/JPY pair surged past 108.00, now trading a handful of pips below a daily high of 108.20. Japan didn’t release macroeconomic data overnight, with the pair’s rally underpinned by the positive tone of equities and a modest recovery of government bond yields.
The US will release later today a batch of minor data, including June Existing Home Sales, seen declining by 0.2% when compared to the previous month, and the Richmond Fed Manufacturing Index for July, expected at 5 vs. the previous 3.
USD/JPY short-term technical outlook
The USD/JPY pair is trading just above the 50% retracement of its July’s decline, stuck around directionless 100 and 200 SMA in the 4 hours chart, while the 20 SMA gains strength upward at around 107.80. Technical indicators are retreating from overbought levels, but are far from suggesting bullish exhaustion. The pair topped around the 108.40 area last week, now the immediate resistance and the level to surpass to support additional gains ahead.
Support levels: 108.00 107.50 107.20
Resistance levels: 108.40 108.85 109.20
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