USDJPY Price Pulls Back, Bearish Movement May Continue

USDJPY Price Analysis – July 14

In case bulls increase their pressure, USDJPY may increase towards the resistance level of $111 and if the daily candle close above it, it will increase the price to $113 resistance level. Should the bulls’ pressure fails at resistance level of $110, price may reverse and the bearish movement may continue towards the support level at $109, $108 and $107.


Key levels:

Resistance levels: 110, $111, $113

Support levels: $109, $108, $107

USDJPY Long-term Trend: Bullish

USDJPY is bullish on the long-term outlook. Two weeks ago, the currency pair was under the control of bears. USDJPY tested the resistance level of $111 on July 01 and reversed after the formation of bearish engulfing candle. On July 08, the support level at $109 was tested and the bulls reacted against the price decrease. The bulls have been dominating the USDJPY market since four days ago. Today, the price is pulling back as the bears are in control of the USDJPY market.

USDJPY daily chart, July 14

The price is trading above the 9 periods EMA and 21 periods EMA as a sign of bullish movement. In case bulls increase their pressure, USDJPY may increase towards the resistance level of $111 and if the daily candle close above it, it will increase the price to $113 resistance level. Should the bulls’ pressure fails at resistance level of $110, price may reverse and the bearish movement may continue towards the support level at $109, $108 and $107.

 USDJPY Medium-term Trend: Bullish

USDJPY is on the bullish movement on the 4-hour chart. The currency pair was on the bearish movement last week. The bearish momentum pushed the price to the support level at $109. A bullish engulfing candle formed and this triggered the bulls’ pressure. The price increase towards the resistance level of $110 after crossing the two dynamic resistance upside.

USDJPY 4 hour chart, July 14

The price is trading above the 9 periods EMA and the 21 periods EMA, the Relative Strength Index period 14 is at 50 levels with the signal line displaying a bearish direction which may be a pullback.

Dollar Edges Lower; Remains Elevated After Inflation Jump

The dollar edged lower in early European trade Wednesday, handing back some of the previous session’s sharp gains after a jump in U.S. inflation raised expectations of an early move by the Federal Reserve to tighten monetary policy.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 92.698, falling back from the previous session’s high of 92.832, just below the three-month peak of 92.844 reached last week.

USD/JPY dropped 0.1% to 110.48, EUR/USD rose 0.1% to 1.1789, just above its three-month low of 1.1772, while the risk-sensitive AUD/USD rose 0.2% to 0.7460.

U.S. consumer prices rose by 0.9% in June, the most in 13 years, with the year-on-year figure soaring 5.4% as the economic recovery gathered momentum.

“While everyone expected price pressures to increase, [this] report illustrates how significant the problem has become. Not only are prices rising sharply, but the increases are more widespread, which means prices can remain high for longer,” said Kathy Lien, an analyst at BK Asset Management, in a note.

This puts the spotlight firmly on Fed chair Jerome Powell as he testifies before Congress on Wednesday and Thursday, with the market looking for any signals on the timing of a tapering of stimulus and higher interest rates. 

Elsewhere, GBP/USD rose 0.2% to 1.3837 after U.K. consumer prices climbed 2.5% on the year in June, the biggest rise since August 2018 and the second month in a row that inflation has surprised to the upside.

While this will increase the pressure on the Bank of England to act, the data also showed factory gate prices rising more slowly, suggesting that the impact of the sharp commodity price rises is fading.

NZD/USD soared 1.2% to 0.7026 after New Zealand’s central bank ended its NZ$100 billion bond-buying program, effectively signaling that an interest rate hike was just around the corner.

The country’s economy has been less affected by the Covid-19 pandemic than many, growing 1.6% in the first quarter, raising concerns that the stimulative monetary policies could lead to overheating.

There are more central bank meetings due Wednesday. The Bank of Canada is widely expected to announce further asset tapering, while Turkey’s central bank is likely to keep interest rates unchanged for the fourth consecutive month given a weak currency and rising prices.

USD/CAD traded 0.1% lower at 1.249 and USD/TRY rose 0.1% to 8.6261.

Also, USD/ZAR fell 0.2% to 14.6922, with the rand bouncing slightly after falling almost 3% over the last week in the wake of the violence that erupted following the jailing of former President Jacob Zuma.

Dollar Up, Boosted by Dovish Powell Comments, Investors Digest Chinese Data

The dollar was up on Thursday morning in Asia but started a retreat from recent peaks. Investors digested economic data from China showing a slowdown in GDP growth and the economic recovery from COVID-19 alongside further dovish comments from U.S. Federal Reserve Chairman Jerome Powell over

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 92.410 by 12:38 AM ET (4:38 AM GMT).

The USD/JPY pair edged down 0.12% to 109.86 ahead of a Bank of Japan policy decision that will be handed down on Friday.

The AUD/USD pair was down 0.26% to 0.7460, with Australia releasing lower-than-expected labor data for June earlier in the day. The employment change was 29,100 and the full employment change was 51,600, while the unemployment rate was a better-than-expected 4.9%.

The NZD/USD pair was down 0.30% to 0.7011, paring some of its gains made after Wednesday’s Reserve Bank of New Zealand policy decision. The central bank’s surprise move to halt its large-scale asset-purchase program from the following week carried the New Zealand dollar through its best session in nearly five months overnight.

The USD/CNY pair inched down 0.07% to 6.4646, with the yuan easing from the one-month high hit during the previous session and last at 6.4613 per dollar in offshore trade.

Data released earlier in the day said the Chinese GDP grew 7.9% year-on-year and 1.3% quarter-on-quarter in the second quarter. Industrial production also grew 8.3% year-on-year in June while the unemployment rate was unchanged at 5%.

The data follows the People’s Bank of China’s surprise cut in the reserve requirement ratio during the previous week.

The GBP/USD pair edged down % to 1.3839.

Powell testified before the House of Representatives Financial Services Committee on Wednesday, where he said that monetary policy would remain accommodative and that inflationary pressures will likely moderate. However, he also warned that the Fed would act if inflation was persistently and materially above its 2% target. Investors now await Powell’s second round of testimony later in the day.

“The market is still on an uncertain path,” with investors neither entirely convinced Powell can keep policy super easy nor sure about the trajectory of recovery as the COVID-19 virus mutates, National Australia Bank (OTC:NABZY) strategist Rodrigo Catril told Reuters.

“The dynamics of different currencies seem to be being overwhelmed by the dollar dynamic,” which is in turn being driven by data and by the spread of the virus’ Delta variant, he added.

Investors now look to Jul. 19, when the U.K. hopes to lift almost all its remaining COVID-19 restrictions.

“The big experiment is really the full reopening in the U.K….. that could be successful, we think it’s going to be a huge factor in terms of confidence and pricing a broader and sustained recovery,” which could weaken the dollar, said Catril.