USD/JPY Current price: 109.62
- Japanese yearly inflation rose by 0.9% in April, more than doubling the market's expectations.
- US Treasury yields bounced modestly, limiting the USD/JPY pair slump.
The USD/JPY pair consolidates losses in the 109.50/60 region, as dollar's bleeding came to a halt at the beginning of the day. Japan released overnight April´s National inflation, which came in much better than anticipated, rising 0.9% when compared to a year earlier vs. the expected 0.4% and the previous 0.5%. Japanese data fell short of boosting the JPY, overbought ahead of the release amid a run to safety. The pair bounced just modestly from its lows, helped by a modest uptick in US Treasury yields, which fell to multi-year lows. Speculative interest paused the activity, a situation that extends in the European session, ahead of the release of the US Durable Goods Orders.
Durable Goods Orders are expected to have declined by 2.0% in the month, following an upward revision to 2.8% in March. Orders ex-transportation are seen posting a modest 0.2% advance, while the most relevant Nondefense Capital Goods ex-aircraft orders are forecasted to fall by 0.3%. The US won't release any other relevant reading.
The USD/JPY pair trades around the 61.8% retracement of its latest bullish run, unable to clear the resistance area after breaking below it Thursday. Technical readings in the 4 hours chart suggest that the risk remains skewed to the downside, as the 20 and 100 SMA converge around 110.10 with bearish slopes, while technical indicators barely bounced from near oversold readings, lacking enough strength to suggest an upcoming recovery. The bullish case will look firmer if the pair manages to extend its advance beyond the 109.90 price zone.
Support levels: 109.45 109.00 108.70
Resistance levels: 109.90 110.20 110.65
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