USD/JPY Forecast: Anxious investors looking for direction
|USD/JPY Current price: 107.75
- Civil unrest in the US weighs on the greenback despite a better market mood.
- US ISM Manufacturing PMI expected to have bounced to 43 in May from 41.5 in April.
- USD/JPY continues to trade within familiar levels, buyers hesitate ahead of 108.00.
The greenback started the day with a soft tone, weighed by unrest in the US over the death of a black citizen in the hands of a police officer. Riots started last week, but escalated over the weekend, with protesters reaching the White House on Sunday. The USD/JPY pair fell to 107.37 from where it later recovered towards the current 107.70 region. Some European countries celebrate a holiday today, although those that don’t, are seeing local indexes posting substantial gains, underpinning the pair.
Japanese data released overnight was generally positive, as Capital Spending in the first quarter of the year increased by 4.3% much better than the -4.2% expected. The May Jibun Bank Manufacturing PMI was confirmed at 38.2. The US session will bring the final May Markit Manufacturing PMI, seen unchanged from the preliminary estimate at 39.8, and the official ISM Manufacturing PMI, expected to have bounced to 43 in May from 41.5 in April.
USD/JPY short-term technical outlook
The USD/JPY pair is trading in its comfort zone despite anxious investors looking to re-position at the beginning of the month. The neural stance persists in the short-term, as the pair remains trapped between 107.30 and 108.10. In the 4-hour chart, the pair continues to seesaw around its moving averages, now developing above all of them after meeting buyers around a bullish 100 SMA. Technical indicators have recovered from their daily lows, heading higher around their midlines.
Support levels: 107.30 106.90 106.65
Resistance levels: 108.10 108.45 108.80
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