- Japanese data disappointed, economic slowdown becoming more evident.
- USD/JPY major resistance area between 109.05 and 109.20, bullish above it.
The USD/JPY pair continues trading in a limited intraday range, marginally higher daily basis. The pair has little from where to take clues, as equities trade mixed but not far from their opening levels. The risk factors that dominated the market for the last few months remain the same, latent, coming in and out from center stage leaving the pair directionless. The modest daily uptick can be explained by rising government bond yields, with the yield on the benchmark 10-year Treasury note currently at 2.73%, matching last week's high.
Japanese data released at the beginning of the day was overall disappointing, as the Domestic Corporate Goods Price Index was down in December by 0.6% MoM, posting a modest yearly advance of 0.8%. Machinery Orders in November remained flat, failing to grow, while when compared to a year early, were up 0.8% better than the market's forecast but far below the previous 4.5%. Finally, the Tertiary Industry Index was down 0.3% in December. Just minor data from the US will be out today as the government shutdown continues.
The pair is near a fresh weekly high of 108.79, still below the 61.8% retracement of its December/January decline at 109.05. The 4 hours chart shows that the 100 SMA heads south a handful of pips above this last, while a key static resistance level comes at 109.20, where the pair was trading earlier this month before collapsing. Technical indicators in the mentioned chart advance within positive levels, with the Momentum reaching fresh weekly highs and the RSI at 58, supporting additional short-term gains. The pair would need to take out the 109.20 resistance to turn bullish.
Support levels: 108.60 108.30 108.00
Resistance levels: 108.85 109.20 109.50
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