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Abstract:USD/JPY Forecast: Approaching June’s high
US Treasury yields recovered from multi-week lows, underpinned USD/JPY.
Japanese April Industrial Production rose by more than anticipated.
USD/JPY is bullish in the near-term, immediate resistance at 110.30.
The USD/JPY pair reclaimed the 110.00 mark, hovering around the level heading into the Asian opening. The pair accelerated its advance during US trading hours, as US Treasury yields advanced. The yield on the benchmark 10-year note bottomed for the day at 1.45%, to later recover to 1.50%. The sour tone of equities was unable to impact the pair.
Japan published April Industrial Production, which was up by 2.9% MoM and 15.8% YoY, beating expectations. Capacity Utilization in the same month was up 1.1%. On Tuesday, the country will release the April Tertiary Industry Index, previously at 1.1%.
USD/JPY short-term technical outlookThe USD/JPY pair holds on to daily gains, trading just above the 110.00 level, bullish in the near-term. The 4-hour chart shows that the pair keeps advancing beyond bullish moving averages, while technical indicators lost their bullish strength but hold near their daily highs, well into positive levels. The pair set a monthly high this June at 110.32, the level to beat to confirm another leg north.
Support levels: 109.80 109.35 108.90
Resistance levels: 110.30 110.75 111.05
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The yen weakens further as Fed Chair Powell's cautious remarks influence market sentiment. USD/JPY remains around 161, with resistance at 162, driven by Powell's comments and upcoming US CPI data. June's lower-than-expected PPI in Japan adds pressure on the yen. The sentiment is bullish for USD/JPY, supported by strong US economic indicators. Key influences include Federal Reserve signals, US economic data, and Japan's PPI. Potential movement for USD/JPY could see it testing 162 resistance.
The U.S. ISM Manufacturing PMI dropped to 48.5 in June, below expectations, but the dollar rebounded after a Supreme Court ruling in favor of Trump. Investors await U.S. job data for hints on potential Federal Reserve rate cuts. Despite rising U.S. bond yields, gold remains strong near $2300. If it breaks above the 50-day moving average of $2337, it could reach $2390-$2400, but faces resistance at $2339.21. A drop below $2323.29 would weaken the bullish signal; watch for a breakout in the $2291.
The yen continues to weaken against major currencies, with USD/JPY potentially climbing above 165. Japan's officials express concerns, hinting at potential intervention. Stable domestic indicators fail to support the yen amid robust USD performance.
The USD/JPY pair is predicted to increase based on both fundamental and technical analyses. Fundamental factors include a potential easing of aggressive bond buying by the Bank of Japan (BoJ), which could lead to yen depreciation. Technical indicators suggest a continuing uptrend, with the possibility of a correction once the price reaches the 157.7 to 160 range.