USD/JPY Forecast: Recovery continues despite limited momentum

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.92

Japan Tankan Large Manufacturing Index foreseen in Q2 at -31 from -8 in the previous quarter.
Comments from Federal Reserve’s Powell played against safe-haven currencies.
USD/JPY trades near 108.00 could extend its advance in the upcoming sessions.

The USD/JPY pair reached a fresh 3-week high of 107.97, ending the day not far below the level. A better market mood after cautiously optimistic comments from US Fed’s Powell and the positive tone of equities underpinned the pair, although gains were limited by absent dollar’s demand. US Treasury yields, in the meantime, posted modest intraday advances, with the yield of the 10-year note up to 0.66%.

Japan published the May Unemployment Rate, which surged to 2.9%, while Industrial Production in the same month plunged 8.4% MoM and fell 25.9% when compared to a year earlier. Housing Starts, however, were down 12.3% vs. -15.9% expected. The country will publish the June Consumer Confidence Index this Wednesday, foreseen at 20.9 from 24 in the previous month. It will also publish the Tankan Large Manufacturing Index, seen in Q2 at -31 from -8 in the previous quarter.

USD/JPY short-term technical outlook

The USD/JPY pair has reached the 50% retracement of its June decline, pressuring the level ahead of the Asian opening. In the short-term, the risk is skewed to the upside, although the momentum is still limited. In the 4-hour chart, the pair has spent the day above all of its moving averages, with the 20 SMA advancing above the 100 SMA. Technical indicators, in the meantime, remain near their daily highs, although without directional strength.

Support levels: 107.50 107.10 106.70

Resistance levels: 107.95 108.30 108.65

View Live Chart for the USD/JPY

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.

EUR/USD holds firm near 1.1850 amid USD weakness

EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold remains supported by China's buying and USD weakness as traders eye US data

Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Cardano steadies as whale selling caps recovery

Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.

Japan's Takaichi secures historic victory in snap election

In Japan, Prime Minister Sanae Takaichi's coalition secured a supermajority in the lower house, winning 328 out of 465 seats following a rare winter snap election. This provides her with a strong mandate to advance her legislative agenda.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.