Home USD/JPY clings to daily gains around mid-112s ahead of Wall Street’s opening bell
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USD/JPY clings to daily gains around mid-112s ahead of Wall Street’s opening bell

  • USD/JPY trades in a 35-pip range on Friday.
  • US Dollar Index stays quiet around 96.
  • Coming up: Existing home sales data and speech by Fed’s Bostic.

After closing the previous day lower with the JPY taking advantage of the risk-off mood, the USD/JPY staged a modest recovery during the first half of the day on Friday and was last seen trading at 112.45, where it was up 0.2% on a daily basis.

The US Dollar Index, which rose sharply on Thursday, extended its upside move to a fresh 10-day high of 96.10 on Friday and went into a consolidation phase. Ahead of the existing home sales data and Atlanta Fed President Raphael Bostic’s speech, the index was virtually unchanged on the day near 96.

Furthermore, investors will be paying a close attention to the performance of Wall Street. Since the start of the week, markets’ risk perception has been the primary driver of the pair’s price action as reflected by yesterday’s fall despite the broad-based USD strength. If major equity indexes start the day on a positive note and retrace Thursday’s heavy losses, we can see the bullish momentum gathering strength.

Technical outlook

Despite today’s recovery, the pair continues to stay neutral with the RSI indicator on the daily chart moving sideways near the 50 mark. The pair could face the first technical resistance at 112.70 (Oct. 18 high) ahead of 113 (20-DMA) and 113.40 (Oct. 10 high). On the downside, supports align at 112 (psychological level), 111.65 (100-DMA) and 111.15 (Sep. 13 low).

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