USD/JPY is currently trading at 111.35 with a high of 111.59 and a low of 111.20 while Japanese Nikkei manufacturing PMI came in at 52.7 vs 52.8 prior.
USD/JPY has been confined to a narrow range on the 111 handle after a string performance for the latter part of April’s business, recovering from 108.20. Despite periods where yields in the US 10-year had been struggling below the psychological 2.30% level, the greenback’s strength is underpinned by expectations of a Fed hike in June while the BoJ still struggles with soft CPI and weak industrial output in March.
However, the US reported Q1 GDP preliminary data at the end of last week that missed expectations. The median forecast in the Bloomberg survey was for a 1.0% annualised gain vrs the averaged 1.1% gains since 2010, but came in at 0.7%. Also, the Michigan consumer confidence index fell to 97 in April from 98 in March. However, analysts at Brown Brothers Harriman suggested that the Fed’s statement this week is likely to look past the setback in Q1 and that the US jobs report may be of greater importance than the FOMC meeting.
USD/JPY: Use 111/112 as a guide – Jim Langlands
Technically, Valeria Bednarik, chief analyst at FXStreet explained that the daily chart shows that the price has settled above is 200 DMA, but also that the 100 DMA heads modestly lower around 112.70 and is the level to surpass to confirm a more sustainable recovery.
“In the same chart,” she explained, “the Momentum indicator heads sharply higher within positive territory, whilst the RSI indicator also advances around 59, all of which supports additional gains. In the 4 hours chart, the price is also above its moving averages that anyway maintain their bearish slopes, the RSI indicator hovers around 65, but the Momentum heads south around its 100 level, indicating diminishing buying interest around the pair.”