USD/JPY: Bulls and bears jostle around 110.80

  • USD/JPY struggles around 110.80 during initial Friday.
  • Recent data from the US and Japan, coupled with developments surrounding a trade-deal between the world’s two largest economies, contribute to near-term pair moves.
  • The 110.55-85 range is likely an immediate barrier for the pair.

The Japanese Yen (JPY) trades near 110.80 against the USD during early Asian trading on Friday. The USD/JPY pair has been struggling in a small range since last few days as mixed news from the US-China trade, economic calendar and monetary policymakers troubled traders. Out of them, Thursday’s data dip from the US and dovish comments from Fed member contributed to the pair’s decline while positive signals for the US-Sino trade accord and soft Japanese inflation numbers helped the rise today.

On Thursday, there were many economic draw-downs from the US. Among them, negative reading of the Philly Fed manufacturing index to -4.1 from prior 17.00, followed by the 53.7 print of Markit flash manufacturing purchasing manager index (PMI) versus 54.9 earlier, grabbed major market attention. It should also be noted that a slump into a contraction region by the Eurozone flash manufacturing PMI to 49.2 against 50.5 previous also hurt global investor sentiment.

In case of Fed policymakers, St. Louis Fed president James Bullard said that normalization is coming to an end and the December hike may have gone too far. The news renewed concerns that the Fed is far from another rate-hike and dragged the USD downwards.

Following little weakness, the USD/JPY benefited from the early-day positive sentiment at the trade front on Friday. China’s readiness to import more of the US agricultural products and absence of any negative headlines pleased buyers whereas the US President Donald Trump’s afternoon meeting with the Chinese Vice Premier Liu He strengthened the mood.

At the economic front, Japan’s January month headline CPI rose 0.2% y/y against 0.3% prior while National CPI ex-fresh food y/y matched 0.8% market consensus versus 0.7% earlier.

While mixed data and lack of uniform reports from the trade negotiations between the world’s two largest economies continue signaling uneven moves, pessimism surrounding the global economic growth could continue favoring bulls.

USD/JPY Technical Analysis

A downward sloping trend-line connecting Wednesday and Thursday highs could cap the pair’s immediate upside at 110.85, a break of which can register 111.00 and 111.15 as quotes.

Meanwhile, 110.55 seem nearby support for the pair followed by 110.25 and 110.00.

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