USD/JPY Forecast: Losing its bullish momentum but not far from its weekly high
|USD/JPY Current Price: 107.58
- The Bank of Japan will have an emergency monetary policy meeting this Friday.
- Manufacturing output in Japan contracted further in May, with the PMI down to 38.4.
- USD/JPY holding well above the 107.00 level, but bulls losing interest.
The USD/JPY pair recovered the ground lost on Wednesday during the last few sessions, ending the day at around 107.60. The pair peaked at 107.84 during Asian trading hours, later easing on the back of rising risk aversion. Japanese data released at the beginning of the day was mixed, as the April Merchandise Trade Balance came in at ¥-930.4B much worse than anticipated. Exports were down by 21.9% while imports decreased by 7.2%.
Also, the preliminary estimate of the Jibun Bank Manufacturing PMI came in at 38.4 in May after printing at 41.9 in April, indicating a sharper drop in output and hinting a steeper downturn ahead. On a positive note, the government decided to lift the state of emergency in three prefectures this Thursday, amid decreasing coronavirus cases.
This Friday, the BOJ will have a special monetary policy meeting, in which they will probably announce another set of measures to support the local economy. The country will also publish its National inflation figures for April. The annual CPI ex-fresh food is foreseen at -0.1% from 0.4% previously.
USD/JPY short-term technical outlook
The USD/JPY pair is losing its bullish stance, despite holding near its recent highs. The 4-hour chart shows that the pair is barely holding above its 20 SMA, which maintains its bullish slope above the larger ones. The Momentum indicator, in the meantime, crossed its mid-line into negative territory, while the RSI is directionless at around 55. The pair would need to break below 107.30 to be able to extend its slide this Friday.
Support levels: 107.30 106.90 106.65
Resistance levels: 108.00 108.40 108.80
View Live Chart for the USD/JPY
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.