USD/JPY extends retreat from 1-week highs to test daily lows
- Yen strengthens as Wall Street erases gains and US yields drop.
- Greenback posts mix results after data, await news from Japan.
The USD/JPY dropped to 107.65, slightly above Asian session lows and remains near the lows. Earlier today peaked at 108.15, the highest level in a week before turning to the downside.
The pair remains closely correlated to Wall Street indexes and US yields. The DOW JONES after spending most of the time in positive territory, now is losing 0.15%. The move lower pushed USD/JPY back to the daily lows area. Caution across markets prevails ahead of the G20 summit and particularly the meeting between President Trump and President Xi Jinping. Regarding yields, the US 10-year fell from 2.06% to 2.02%, adding more strength to the yen.
US data was ignored by markets. The third estimate of real Q1 GDP showed the US economy expanded by 3.1% on a yearly basis, in line with expectations. In a different report, the Labor Department mentioned initial jobless claims rose by 10K to 227K, the highest level in seven weeks. The National Association of Realtors reported that Pending Home Sales index rose 1.1% in May. The US dollar remained steady after the data, in the recent range around 96.20.
USD/JPY; Intraday bearish bias
From a technical perspective, the USD/JPY hourly chart favors the downside after breaking a short-term uptrend line and with the 20 SMA turning south. The immediate support is 107.65 (daily low) followed by 107.50 and 107.30. On the upside, a recovery back above 107.95 would remove the bearish pressure, still, the 108.10 resistance area is a strong barrier that should limit the upside but a break higher could clear the way to more gains.
More levels