Search ForexCrunch
  • Easing concerns over trade conflict improve market sentiment.
  • Wall Street records large gains in the early NA session.
  • US Dollar Index fails to stay in the positive territory.

The broad-based greenback weakness witnessed in the early NA session dragged the USD/JPY pair to 110.55. However, the optimistic mood surrounding the major equity indexes in the U.S. started to weigh on the safe-havens and the pair retraced its losses. At the moment, the pair is virtually unchanged on the day at 110.75.

The data from the U.S. on Thursday revealed that building permits rose 1.5% in July while housing starts increased 0.9% compared to the market expectation of 7.4%. Furthermore, the Philadelphia Fed Manufacturing Index plunged to 11.9 in August from 25.7 in July to fall short of the experts’ estimate of 22. Reacting to the mixed-data, the US Dollar Index extended its corrective slide and was last seen at 96.45, where it was down 0.27% on a daily basis.

Meanwhile, after closing the previous day sharply lower, Wall Street rebounded strongly on Thursday with the Dow Jones Industrial Average and the S&P 500 adding 1.3% and 0.7% respectively. Reports of Chinese government officials planning to meet with their American counterparts later this month to discuss the issues surrounding the trade relations seem to be the primary driver of the rising risk appetite.

There won’t be any other macroeconomic data releases from the U.S. in the remainder of the day and the risk perception is likely to continue to drive the pair’s price action.

Technical outlook

On the upside, the pair could encounter the first resistance at 111.10 (20-DMA/50-DMA) ahead of 111.55 (Aug. 6 high) and 112.15 (Aug. 1 high). Supports, on the other hand, are located at 110.45/40 (daily low/100-DMA), 110 (psychological level) and 109.35 (200-DMA).