“¢ Bulls continue to show some resilience below 200-DMA amid US-China trade optimism.
“¢ Investors seemed reluctant to place aggressive bets ahead of this week’s event/data risks.
“¢ Traders now eye today’s release of core PCE price index for some short-term impetus.
After Friday’s sharp intraday pullback, the USD/JPY pair regained some positive traction at the start of a new trading week and is currently trading with a mild positive bias just above mid-110.00s.
The pair did get a minor lift and spiked to an intraday high level of 112.03 after the advance US GDP report showed that the US economic growth stood at 3.2% annualized pace during the first quarter of 2019, surpassing even the most optimistic estimates.
The uptick, however, turned out to be short-lived, rather met with some aggressive supply as details revealed that a major part of the growth was primarily led by unsustainable factors – inventory buildup and government spending, and subdued inflation data.
Weaker price data reinforced expectations that the Fed will stick to its cautious stance and triggered a sharp intraday slide in the US Treasury bond yields, which exerted some downward pressure, though bulls once again showed some resilience below the very important 200-day SMA.
Investors still seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of this week’s key event/data risk – the latest FOMC monetary policy update on Wednesday and the closely watched US monthly jobs report (NFP) on Friday.
This coupled with growing optimism over a possible US-China trade deal continued denting the Japanese Yen’s safe-haven status and extended some additional support to the major ahead of today’s release of core PCE price index – the Fed’s preferred inflation gauge later during the early North-American session.
Technical levels to watch
Any subsequent up-move now seems to confront immediate resistance near the 111.85 horizontal zone and is closely followed by the 112.00 handle, above which the pair is likely to aim towards retesting the 112.15-20 supply zone en-route YTD tops, around the 112.40 region.
On the flip side, the 111.40 area might continue to act as immediate support, which if broken might turn the pair vulnerable to slide further towards testing the 111.00 round figure mark before eventually dropping to its next major support near the 110.85 region.
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