The USD/JPY currency pair on Friday bounced off session lows of about 109.354 to surge towards 111491 before pulling back late on to settle at 110.753. The currency pair has been on a bullish run since March 9 when it bottomed at a new 3-year low of 101.166.
Friday’s late pullback pushed the pair back the normal trading zone of the 60-min RSI off the overbought levels. This creates more room up top to continue in the current trend.
USD/JPY Fundamentals Overview
From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busy period in the global financial markets. While some businesses may be closing doors, various governments have taken measures to ensure that the global economy does not spiral into meltdown. A flurry of rate cuts led by the US 100 basis points cut have been implemented to reduce the burden on the economy amid a slowdown in business activity.
The latest economic data have pointed towards a potential slowdown in global economic growth. In the US, retail sales for February missed estimates on all counts. On the other hand, the NY Empire State Manufacturing Index for March missed the expectation of 4 with -21.5. Housing Starts for February beat expectations on both counts while Building permits came short. On Thursday, the Philadelphia Feb manufacturing Index for February missed the expectation of 10 with -12.7.
In Japan, machinery orders for January were better than expected. The bank of Japan also kept the base interest rate unchanged at -0.1% while industrial production and imports and exports for February beat expectations. The CPI ex-food and energy for Feb. came short fo expectations (YoY) while the all industrial activity index outperformed.
USD/JPY Technical Analysis (the 60-min Chart)
Technically, the USD/JPY currency pair appears to be trading under a strong short-term bullish bias in the market sentiment. This comes at the back of a major collapse through March 9. The bulls appear to have taken control of the pair in the short-term.
They will target profits at around 111.491 or higher at 112.179. On the other hand, the bears will target pullback profits at around 110.112, or lower at 109.354.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair appears to have recently made a sharp recovery after bottoming at a new 3-year low. This thrust the pair back to the smaller ascending channel inside the main descending channel.
The bulls will be looking to extend gains towards 112.287 or higher at 114.117. On the other hand, the bears will target long-term pullback profits at around 109.560 or lower at 107.854.