- USDJPY has traded between a range of 109.14 and 109.56 and is up 0.9% on the day.
- The pair has managed to hold onto the 109 handle despite risk-off sentiment.
The U.S. session has seen U.S. stocks tumble into negative territory again following further anxiety over the U.S. and Sino. Atteh time of writing, the DJIA is at 25,017.07, down -330.70 points, or -1.30%. Headlines that Chinese state media was reporting that the nation is prepared to use rare-earth minerals as an economic weapon has intensified investor ´s anxiety at the start of the day.
Meanwhile, the focus will now be on GDP data from the US and perhaps, more importantly, the PCE data at the end of the week.
We expect a solid 0.2% m/m increase in core PCE prices, which should translate into a steady 1.6% y/y inflation rate with rounding. Risks are skewed to a softer print, in our view. We look for muted consumer spending after an outsized 0.9% m/m jump in March. The choppiness in the spending data should fade as tight financial conditions and delayed tax refunds recede from view.
Analysts at TD Securities explained.
Valeria Bednarik, the Chief analyst at FXStreet explained that the USD/JPY pair trades at the lower end of its monthly range, retaining the negative bias according to the 4 hours chart, as it is unable to advance beyond a bearish 20 SMA, while the 100 SMA heads south well above the shorter one.
Technical indicators in the mentioned chart remain within negative levels, although lacking directional strength. Additionally, the pair keeps moving away from the 61.8% retracement of its latest bullish run, a strong resistance at 109.65. The bearish trend would likely resume on a break below 109.00 while selling interest will continue to add on bounces toward the mentioned Fibonacci resistance.
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