- The USD/JPY fell back into familiar lows for Monday, declining through the 149.00 handle to trade into 148.40.
- After the weekend's Gaza escalation, risk appetite remains twitchy.
- Markets head into another round of US inflation data due in the back half of the trading week.
The USD/JPY traded down on Monday, slipping 0.67% as market flows tussled with risk aversion following a Hamas rocket attack over the weekend that left 700 Israelis and at least 12 Americans dead over the weekend. The Israeli counteroffensive claimed another 700 Palestinian lives, and broader markets are facing fears that the worst escalation of the long-running Gaza conflict could see the region embroiled in a geopolitical storm, which could threaten trade, supply, and production in the Middle East.
Forex Today: US Dollar weakens despite Middle East concerns
The Japanese Current Account (non-seasonally adjusted) for August came in at , versus the forecast ¥3,090.9B and the previous reading of ¥2,771.7B.
Japan Trade Balance misses the mark, prints a miss at ¥2,279.7B versus the forecast ¥3,090.9B
The week ahead sees a decent collection of US data over the horizon: Wednesday sees US Producer Price Index (PPI) figures, Thursday has another round of Consumer Price Index (CPI) inflation measures, and Friday will cap off the trading week with the Michigan Consumer Sentiment Index.
The Japanese economic calendar data docket is notably thin for the remainder of the week, with strictly low-impact numbers on the offering.
USD/JPY Technical Outlook
Despite the USD/JPY's Monday declines, the pair remains overall incredibly well-bid, peaking at yearly highs at the 150.00 major handle and trading incredibly far above the 200-day Simple Moving Average (SMA), currently turning bullish into 139.00.
Short interest will need to make a decisive break of the 50-day SMA near 147.00 before they can continue on making a run at the last meaningful swing low from all the way back in July into 138.00, while an upside continuation runs the risk of policy intervention from the Bank of Japan (BoJ) on behalf of the Yen moving forward.
USD/JPY Daily Chart
USD/JPY Technical Levels
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