20 & 50 EMA Resistance!
The USD/JPY was closed at 108.88 after placing a high of 109.29 and a low of 108.83. USD/JPY pair continued its bearish streak for the 4th consecutive session and dropped on Tuesday amid the persistent weakness in the U.S. dollar and prevailing risk-off market sentiment. The currency pair USD/JPY extended its losses on Tuesday as the U.S. dollar remained depressed amid the expectations that the Fed will keep interest rates low for longer. The focus of the investors shifted to the release of the FOMC meeting minutes that are scheduled on Wednesday.
The U.S. Dollar Index that measures the value of the U.S. dollar against the basket of six major currencies, slipped to its lowest level since late February on Tuesday by 0.3% and reached below 90 levels to $89.69. Meanwhile, the U.S. treasury yields on the benchmark 10-year note also dropped on Tuesday to 1.628% and added further weight on the U.S. dollar that dragged the currency pair USD/JPY on the downside.
On the data front, at 04:50 GMT, Prelim GDP Price Index for the year from Japan reduced to -0.2% against the forecasted -0.1% and weighed on the Japanese Yen that further capped losses in USD/JPY pair. The Prelim GDP for the quarter from Japan also declined to -1.3% against the projected -1.1% and weighed on the Japanese Yen that limited the losses of the USD/JPY pair on Tuesday. At 09:30 GMT, the Tertiary Industry Activity surged to 1.1% against the predicted 0.8% and supported the Japanese Yen that added further losses in the USD/JPY pair. From the U.S. side,, at 01:00 GMT, TIC Long-term Purchases surged to 262.2B against the estimated 67.0B and supported the U.S. dollar that capped further losses in the USD/JPY pair. At 17:30 GMT, Building Permits remained flat as predicted 1.77M. The Housing Starts fell to 1.57M against the projected 1.71M and weighed on the U.S. dollar that added further losses in the USD/JPY pair.
The Dallas Federal Reserve President Robert Kaplan said on Monday that he did not expect interest rates to rise until next year. The Federal Reserve Vice Chair Richard Clarida said that the recent disappointing jobs report was evidence that the economy still needs help. After these comments from Fed officials, the prevailing hopes that Fed will hike interest rates faded away as the officials indicated that Fed will tolerate the temporary acceleration in inflation for some time and will remain lower for longer.
This also weighed on the U.S. dollar and dragged the USD/JPY pair on the lower side. Meanwhile, the rising risk-off market sentiment after eight days of continuous military attacks in Israel and Gaza also kept the USD/JPY pair under pressure. France in collaboration with Egypt and Jordan proposed a resolution with the United Nations Security Council and called for a ceasefire in Israel and Palestine conflict.
USD/JPY Intraday Technical Levels
Pivot Point: 109.36
USD/JPY - Technical Outlook
The USD/JPY is trading at 109.025 level, bouncing off over the support area of 108.840. On the higher side, the resistance continues to stay at 109.094 level. The 20 & 50 periods EMA are extending resistance at 109.094; therefore, a bullish crossover of 109.094 level exposes the pair towards the next resistance level of 109.481 and 109.650. At the same time, the bearish breakout of 108.840 level leads the pair towards a support area of 108.650. The RSI and MACD are suggesting bullish bias today. Later today, the focus will remain on the FOMC Meeting Minutes from the U.S., and comments on the U.S. economy will determine the further trend in the USD/JPY pair. All the best!
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