- Industrial production increases 0.3% as expected in September in the U.S.
- US Dollar Index fails to hold above the 95 mark.
- Wall Street starts the day on a strong note to reflect an improved sentiment.
Despite the broad-based USD weakness, the USD/JPY pair clings to its modest daily gains above the 112 mark in the early NA session as the safe-haven JPY struggles to find demand as a safe-haven. At the moment, the pair is up 0.33% on the day at 112.15.
The data released by the Fed on Tuesday showed that the industrial production expanded by 0.3% on a monthly basis in September to match analysts’ estimate while capacity utilization stayed unchanged at 78.1%. Commenting on the data, “Factory production is a leading indicator for the overall U.S. economy and its widespread acceleration in the third quarter bodes well for growth in the balance of this year and into next,” FXStreet Senior Analyst Joseph Trevisani said. Despite this data, however, the US Dollar Index failed to gain traction and was last seen down 0.12% on a daily basis at 94.93.
On the other hand, after closing the day in the red following a failed recovery attempt yesterday, major equity indexes in the U.S. started the day higher to reveal a strong appetite for risk-sensitive assets, which hurts the demand for traditional safe-haven JPY. At the moment, the Dow Jones Industrial Average is up 0.7% on the day and the S&P 500 is adding a little over 1%.
With no other significant macroeconomic data releases in the remainder of the session, the market’s risk perception could stay as the primary driver of the pair’s price action.
Technical outlook by FXStreet Chief Analyst Valeria Bednarik
The pair is short-term bearish according to technical readings in the 4 hours chart, as the latest recovery stalled well below the 100 and 200 SMA, both lacking directional strength, while technical indicators have lost their upward strength after nearing their midlines, now resuming their declines. Below 111.90 the risk turns back to the downside, although a steeper decline should be expected on a break of 111.50, the 100 DMA.
Support levels: 111.90 111.50 111.20
Resistance levels: 112.25 112.60 113.00
Share
