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Fundamental Forex Analysis

USD/JPY keeps the red below 107.00 mark post-US data

  • USD/JPY met with some fresh supply on Friday and retreated further from over one-week tops.
  • Worries over rising coronavirus cases benefitted the safe-haven JPY and exerted some pressure.
  • The USD extended its consolidative price action and moved little after mixed US macro releases.

The USD/JPY pair retreated further below the 107.00 round-figure mark and dropped to fresh session lows in the last hour.

The pair came under some fresh selling pressure on the last trading day of the week and extended the previous day’s pullback from over one-week tops, around the 107.45 region. The downtick could be solely attributed to reviving safe-haven demand for the Japanese yen.

Investors’ remain concerned about the second was of coronavirus infection and the possibility of renewed lockdown measures to control the spread. This, in turn, dampened prospects of a sharp V-shaped global economic recovery and continued taking its toll on the risk sentiment.

On the other hand, the US dollar struggled to capitalize on its gains recorded over the past two trading sessions and remained confined in a narrow trading band. A subdued USD price action did little to influence the intraday momentum or lend any support to the USD/JPY pair.

The greenback remained on the defensive against its Japanese counterpart following the release of mixed US macro data. A report by the US Bureau of Economic Analysis (BEA) showed that Personal Spending in the US increased by 8.2% in May as compared to 9% growth anticipated.

Conversely, Personal Income fell less than expected, by 4.2% during the reported month vs. -6% anticipated. Adding to this, Core PCE Price Index – the Fed’s preferred inflation gauge – came in at 0.1% MoM for May as against consensus estimates pointing to a flat reading.

Friday’s US economic docket also features the release of the revised Michigan Consumer Sentiment Index for June, which might also fail to provide any meaningful impetus to the USD/JPY pair. Hence, the broader market risk sentiment will be looked upon for some short-term trading impetus.

Technical levels to watch

 

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