Eyes on U.S. Retail Sales Figures
The USD/JPY closed at 109.23 after placing a high of 109.76 and a low of 109.11. The USD/JPY pair continued its bearish streak for the 5th consecutive session on Monday and reached its lowest since Aug 4 amid the renewed safe-haven appeal in the market and the weakness of the U.S. dollar.
The safe-haven Japanese Yen gathered strength on Monday after political uncertainty surged in the market amid the recent Afghan government's sudden collapse along with fading recovery hopes. The political situation in Afghanistan deteriorated drastically over the weekend after Taliban insurgents seized the capital city of Kabul. Markets saw a surge in the demand for safe-haven currencies like the Japanese Yen over rising concerns about the geopolitical implications of the sudden collapse of the Afghan government.
The uncertainties regarding political stability in the region kept the safe-haven appeal high on Monday and, hence, the safe-haven currency Japanese Yen gathered strength against the U.S. dollar and dragged the currency pair USD/JPY further towards the downside.
On the data front, at 04:50 GMT, the Prelim GDP Price Index for the year came in at-0.7% against the projected-0.9% and supported the Japanese Yen and added to the loss in the USD/JPY pair. The Prelim GDP for the quarter rose to 0.3% against the predicted 0.1% and supported the Japanese Yen and added further downside pressure on the USD/JPY pair. At 09:30 GMT, the Revised Industrial Production surged to 6.5% against the forecasted 6.2% and pushed the Japanese Yen higher and dragged the currency pair USD/JPY on the downside.
On the U.S. side, the Empire State Manufacturing Index for the month of August was reduced to 18.3 against an estimated 28.9 and weighed on the U.S. dollar and added further loss to the USD/JPY currency pair.
Meanwhile, the U.S. Dollar Index that measures the value of the greenback against the basket of six major currencies gained a minor difference on Monday and reached 92.66 level, whereas the U.S. Treasury Yields on the 10-year note fell for the 5th consecutive session and reached 1.22% level that added further weight to the greenback and dragged the USD/JPY pair further to the downside.
Furthermore, the disappointing economic data from China, along with the rising number of coronavirus cases due to the continuous spread of the Delta variant, also added to the risk-off market sentiment and supported the safe-haven currency Japanese Yen, and dragged the currency pair USD/JPY to the downside. The data about retail sales and industrial production from China showed that the world's second-largest economy struggled to deal with the latest coronavirus outbreak. It raised concerns over the faded economic recovery added to the risk-off market sentiment and weighed on the currency pair USD/JPY on Monday.
USD/JPY Intraday Technical Levels
Support Resistance
108.98 109.63
108.72 110.02
108.33 110.28
Pivot Pont: 109.37
USD/JPY - Technical Outlook
The USD/JPY pair is trading with a bearish bias at the 109.200 level. The pair's immediate resistance stays at the 109.350 level, and below this, the JPY is exposed to the 10.900 and 108.730 support levels. At the same time, the immediate resistance remains at the 109.350 level. A bullish crossover above the 109.350 resistance level exposes the USD/JPY pair towards 109.700 and 109.990 resistance levels. The MACD suggests a bearish trend in the USD/JPY pair, whereas the 50 day SMA (simple moving average) supports a selling trend. The recent bearish engulfing candle below 109.350 makes a bearish trend solid. On Tuesday, the focus will be on the U.S. retail sales data as it has the potential to drive price action in the USD/JPY pair. All the best.
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