“¢ Overnight rebound from 2-1/2 week lows lacks any follow-through.
“¢ Subdued USD/US bond yields fail to provide any bullish impetus.
“¢ BoJ’s special JGB buying operation also does little to lend any support.
The USD/JPY pair came under some renewed selling pressure on Friday and has now eroded a major part of overnight recovery gains from near three-week lows.
The pair on Thursday snapped six consecutive days of losing streak and staged a modest rebound amid a goodish pickup in the US Dollar demand/resurgent US Treasury bond yields.
The up-move, however, lacked any strong follow-through and was being capped by speculation that the Bank of Japan could scale back its massive monetary stimulus soon.
Meanwhile, the BoJ’s move to conduct special fixed rate JGB buying operation to buy an unlimited amount of 10-year JGBs at a yield of 0.100% did little to lend any support, with bulls now seemed struggling to defend the 111.00 handle.
Today’s key focus would be on the advance US GDP print, wherein consensus estimate point to a solid economic growth of 4.1% during the second quarter of 2018. Any positive surprise, over and above already elevated expectations, should provide a boost to the greenback and help the pair to regain some positive traction.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A close above Wednesday’s high of 111.38 would validate yesterday’s bull hammer candle and rebound from the 50-day MA and would open the doors to re-test of the recent high of 113.17.”
“Meanwhile, a close below the 50-day MA of 110.57 would add credence pair’s erosion of the rising trendline (drawn from the March low) and confirm a bearish reversal. In that case, the pair could target the 100-day MA, currently located at 109.17,” he added further.
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