USD/JPY keeps near weekly highs awaiting crucial US data

The USD/JPY is trading within familiar levels in the 105.50/60 price zone, amid mixed clues. The pair is neutral-to-bullish in the short-term as a moderated optimism persists ahead of critical US data, Valeria Bednarik, Chief Analyst at FXStreet, reports.

Key quotes

“The moderated optimism that prevailed through the Asian session suffered a set back after London’s opening, as the EU is set to start legal actions against the UK for breaching the Withdrawal Agreement. European indexes trade mixed, not far from their opening levels. On a positive note, US Treasury yields remain near weekly highs after encouraging US data released on Wednesday. Higher yields usually lead to gains in USD/JPY.”

“Japanese data showed that the economy is not yet out of the woods. The Tankan Large Manufacturing Index resulted at -27 in Q3, better than the previous -34 but missing the expected -23. The September Jibun Bank Manufacturing PMI printed at 47.7 from 47.3 in August. Later today, the US will publish Initial Jobless Claims for the week ended September 25, and the official ISM Manufacturing PMI, foreseen in September at 56.3.”

“The USD/JPY pair has continued to find buyers around the 61.8% retracement of its latest daily decline at 105.40, the immediate support level. The 4-hour chart shows that the pair remains stuck between moving averages, while technical indicators stand above their midlines, but without directional strength. USD/JPY would need to clearly break above the 105.80 resistance to have chances of retesting the 106.26 level, September 11 daily high.”