USD/JPY Finds Resistance at 107.000 After US Retail Sales Data

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The USD/JPY currency pair on Friday pulled back off the current 3-week highs of about 107.055 to trade at around 106.539. This came after the release of US retail sales data. The currency pair is still trading within an ascending wedge in the 60-min chart. This indicates that the bulls retain short-term control of the pair.

The pair is now pinned to the 100-hour SMA while the 200-hour SMA is a few levels lower. Friday’s pullback pushed the currency pair towards oversold levels of the 14-hour RSI.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busy period in both the US and the Japanese markets. On Friday, the US retail sales control group for July beat the expectation of 0.8% with 1.4%. On the other hand, general retail sales for last month missed 1.9% with 1.2% (MoM) while retail sales ex-autos outperformed 1.3% (MoM) with 1.9%. The preliminary Michigan Consumer Sentiment Index for August outperformed 72 with 72.8 while the preliminary Q2 unit labor costs and nonfarm productivity beat 6.2% and 1.5% with 12.2% and 7.3%, respectively. Earlier in the week, the US CPI and PPI for July outperformed expectations.

In Japan, the non-seasonally adjusted current account balance for June beat the expectation of 110 billion Yen with 167.5 billion Yen. The Eco Watchers Survey for July (current and outlook) missed the expectations of 46.6 and 48.2, respectively with 41.1 and 36. On the other hand, the producer price index for July beat the (MoM) and (YoY) expectations of 0.3% and -1.1% with 0.6% and -0.9%, respectively.

USD/JPY Technical Analysis (the 60-min Chart)

Technically, the USD/JPY currency pair appears to be trading within a gently ascending wedge in the 60-min chart. This indicates a short-term bullish bias in the market sentiment. The latest pullback has pushed the pair closer to oversold levels of the 14-hour RSI.

The bears will be looking to build on this pullback by targeting profits at around 106.241 or lower at 105.911. On the other hand, the bulls will target profits at around 106.807 or higher at 107.055.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair appears to be trading within a descending channel. This indicates a long-term bearish bias in the market sentiment. The pair has recently bounced off trendline support to surge towards overbought levels of the 14-day RSI.

The bulls will look to stretch the current rebound run towards 107.575 or higher at 108.366. On the other hand, the bears will look to retain control by targeting profits at around 105.402 or lower at 104.192.

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