Search ForexCrunch

   “¢   The ongoing USD upsurge helps build on this week’s goodish rebound from 1-1/2 month lows.
   “¢   Risk-off mood fails to revive JPY’s safe-haven demand and hinder the positive momentum.  
   “¢   Investors now look forward to the US monthly retail sales data for some meaningful impetus.

The USD stood tall near 14-month highs and helped the USD/JPY pair to build on overnight positive momentum beyond the 111.00 handle.  

The pair extended this week’s goodish rebound from the 110.00 neighborhood, or 1-1/2 month lows, and jumped to one-week high during the Asian session on Wednesday. The ongoing US Dollar upsurge, supported by growing concerns about Turkey’s financial crisis, was seen as one of the key factors driving the pair higher.

Bullish traders seemed to have largely negated a modest retreat in the Asian equities, which tends to underpin the Japanese Yen’s safe-haven demand, and weaker US Treasury bond yields, with the USD price dynamics turning out to be an exclusive driver of the pair’s momentum over the past 24-hours or so.

Moving ahead, today’s key focus would be on the US monthly retail sales figures, which along with some second-tier US economic data should produce some meaningful trading opportunities later during the early North-American session.

The core US retail sales are expected to rise 0.3% m/m while the control group retail sales are seen expanding by 0.4% m/m in July. Any positive surprise should provide an additional boost to the USD and might negate any near-term bearish bias surrounding the major.

Technical levels to watch

Momentum beyond mid-111.00s is likely to get extended towards 111.80-85 supply zone before the pair eventually jumps back above the 112.00 handle towards testing 112.20-25 horizontal resistance.

On the flip side, the 111.00 handle, nearing 50-day SMA, now seems to protect the immediate downside, which if broken might turn the pair vulnerable to slide back towards testing 110.50-45 support area.