Dollar/yen showed little movement for a second consecutive week. On the fundamental front, Japanese releases are all second-tier, which is unlikely to impact on the movement of USD/JPY. In the US, the focus will be on the US consumer, with the release of CPI and retail sales.

USD/JPY fundamental mover

Japan’s GDP posted a third straight decline in GDP, with reading of 0.6% in Q2. Two consecutive declines indicate recession. Tokyo Core CPI improved to 0.4%, up from 0.2% beforehand. Other consumer data continued to point downward. Average Cash Earnings fell by 1.7%, while Household Spending declined by 1.2%. Both of these readings beat the forecasts.

There was positive news from the US manufacturing sector, as the ISM Manufacturing PMI improved to 54.2 in June, up from 53.6 beforehand. A reading above the 50-level points to expansion. US employment data was stronger than expected. Nonfarm payrolls slowed to 1.76 million, down from 4.8 million beforehand. Still, this beat the forecast of 1.53 million. Wage growth beat the estimate of -0.5% with a gain of 0.2%, after two straight declines. As well, the unemployment rate fell from11.1% to 10.2%, beating the estimate of 10.5%.

See all the main events in the Forex Weekly Outlook.

USD/JPY Technical Analysis

109.73 (mentioned last week) is protecting the 110 level, which has psychological significance.

108.30 has provided resistance since early June.

107.22 is next.

106.05 was tested throughout the week.

105.13 is providing support.

104.29 is next.

103.52 was last tested in early March.

102.27 is the final support line for now.

.USD/JPY Daily Chart

USD/JPY Sentiment

I remain neutral on USD/JPY.

The US dollar continues to struggle to find its feet, as the US struggles with the Covid-19 pandemic. At the same time, there are signs of recovery in the US, such as employment and manufacturing.