- Pair bottoms at 112.69 after negative surprise from US housing starts and building permits data.
- Upside pressure eases as US dollar drops across the board.
The USD/JPY pair failed to hold to gains and turned negative for the day. Earlier today hit at 113.12 the highest level since January 9 but it was rejected from above 113.00 and pulled back.
The bearish correction accelerated following the release of US data and also amid a decline of the greenback. US Housing Starts tumbled 12.3% in June (against expectations of a 2.2% slide) while Building Permits declined 2.2% (vs +6.0% of market consensus). The data came in significantly below expectations favoring the retreat of the US dollar. The DXY peaked at 95.41, the highest since June 28 and then fell to 95.12.
USD/JPY dropped to 112.68 and as of writing was trading at 112.75/80, marginally lower for the day and without the positive tone of the previous sessions. Fed’s Powell was giving testimony again at the US Congress.
USD/JPY Short-term technical outlook
The main trends continue to point to the upside but in the very short-term technical indicators favor an extension of the correction. Below the daily low, the next support might be seen at 112.50; a break lower would add to the negative tone, opening the way for a test of 112.15/20 (weekly low).
If USD/JPY manages to rise back above 112.95 (20-hour moving average), it would remove the negative intraday momentum signaling a possible test of 113.10/15. Above, resistance levels could be seen at 113.25 and 113.65.
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