USD/JPY analysis: recovery gains momentum with Powell
USD/JPY Current price: 108.44
- Poor Japanese data limited yen's gains, dollar favored by the Fed's Chief.
- Japan to release trade data, Eco Watchers surveys.
The USD/JPY pair bounced from a daily low of 103.76 to finish the day near its daily highs in the 108.40 area, as equities and yields welcomed Powell's optimistic view of the economy. Chief Powell is aware of the risk that global economic slowdown represents, but he is not concern about a probable recession. Dollar's recovery at the beginning of the day was fueled by poor data coming from China and Japan itself, as, the country's November Leading Economic Index fell to a 2-year low of 99.3, according to preliminary estimates, missing expectations. The Coincident Index also dropped, to 103 from 104.9 in October. The Cabinet Office said that the assessment of the coincident index was weakening. At the beginning of Friday, Japan will publish trade balance data and the Eco Watchers survey on current economic conditions and future perspectives.
The pair is a handful of pips above the 50% retracement of its 111.41/105.16 decline, but the upside potential seems quite limited, as the pair is also developing far below its moving averages, which maintain their downward slopes, while technical indicators recover but within negative levels. Furthermore, the 61.8% retracement of the mentioned slide, which comes around 109.05 has capped advances earlier this week. The 38.2% retracement, on the other hand, comes at 107.55, with a break below skewing the risk to the downside heading into the weekly close.
Support levels: 108.00 107.55 107.20
Resistance levels: 108.60 109.05 109.30
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
