Technical Analysis

USD/JPY Analysis – July 19, 2021

By LonghornFX Technical Analysis
Jul 19, 20213 min

50 Periods EMA Extends Resistance

The USD/JPY was closed at 110.08 after placing a high of 110.36 and a low of 109.73. the currency pair USD/JPY found some support on Friday as it remained green for the day after dropping sharply for the previous two consecutive sessions. The U.S. Dollar Index covering the greenback value against the basket of six major currencies surged on Friday and extended its gains for the second successive session, and reached 92.76 level making the U.S. dollar stronger against its rival currencies.

The strength in the greenback could be attributed to the better-than-expected macroeconomic data of Retail Sales from June. As well as the safe-haven demand for the U.S. dollar was also behind its strength on the last day of the week amid a rising number of coronavirus cases around the globe.

On the data front, at 17:30 GMT, the Core Retail Sales for June increased to 1.3% against the estimated 0.4% and supported the U.S. dollar that pushed USD/JPY higher. In June, the Retail Sales also rose to 0.6% against the predicted -0.4% and supported the U.S. dollar, and added further gains in the USD/JPY pair.

At 19:00 GMT, the Prelim UoM Consumer Sentiment declined to 80.8 against the projected 86.5 and weighed on the U.S. dollar that kept the gains in USD/JPY limited. The Business Inventories fell to 0.5% against the anticipated 0.6% and supported the U.S. dollar, and pushed the currency pair USD/JPY higher. The Prelim UoM Inflation Expectations also remained unchanged at 4.8%.

Meanwhile, the currency pair USD/JPY was also high because of the weak Japanese Yen on the day amid the latest growth forecast from the Bank of Japan. The BOJ cut this year’s growth forecast and said that it expects the economy to expand 3.7% in the current fiscal year that will end in March 2022; this forecast was down from previously projected as 4.0% in April.

On Friday, the Bank of Japan released its fresh quarterly projections; however, it also maintained its view that the economy was moving towards a moderate recovery, signaling that monetary policy would remain unchanged for some time.

Furthermore, the Bank also released an outline of its new scheme that will boost the funding for activities combating climate change and offer banks long-term loans at 0 interest. However, the Bank revised its forecast up from 2.4% to 2.7% for the next year. The rise in expected growth for the next year was attributed to the accelerated vaccinations and increased consumption. The Japanese Yen came under pressure on Friday after the Bank of Japan cut its growth projections for this year and added further strength in the USD/JPY currency pair.

USD/JPY Intraday Technical Levels

Support Resistance

109.68 110.07

109.50 110.28

109.30 110.46

Pivot Point: 109.89

USD/JPY - Technical Outlook

The safe-haven currency pair USD/JPY is trading with a strong selling bias at 109.950 level, having bounced off the support level of 109.850 level. The technical side of the USD/JPY pair hasn’t changed a lot. On the 4 hour timeframe, the pair is closing candles right below the 50 EMA level that’s supporting selling trend in USD/JPY. Besides, the USD/JPY has also violated the upward channel on the 4-hour timeframe, driving a solid selling trend in the USD/JPY pair.

On the downside, the USD/JPY pair is exposed towards the next support level of 109.520 level, and the breakout of this level exposes it towards the support level of 108.940. All the best!


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