USD/JPY and 143 in the Hands of US Consumer Confidence and Beijing

Highlights

• It is a quiet morning for the USD/JPY, with no economic indicators to provide direction.
• However, US economic indicators will influence this afternoon as investors begin considering the Fed and BoJ monetary policy decisions.
• The near-term technical indicators are bullish, signaling a return to 142.

On Monday, the USD/JPY fell by 0.25% to end the day at 141.472. Risk aversion drove demand for the Yen as investors considered China’s real estate woes and uncertainty over Beijing delivering a significant stimulus package.

This morning, there are no economic indicators from Japan or China to move the dial. The lack of economic indicators will leave sentiment toward the Fed and BoJ interest rate decisions to move the dial. However, stimulus chatter from Beijing would also need consideration.

The US Session

US consumer confidence numbers for July will move the dial this afternoon. Economists forecast the CB Consumer Confidence Index to rise from 109.7 to 111.5.

An upward trend in the US CB Consumer Confidence Index would signal a pickup in consumption that would fuel demand-driven inflationary pressures. The numbers could influence the Fed, with consumers likely responding to bets on the Fed hitting the proverbial brakes.

USD/JPY Price Action

Daily Chart

The Daily Chart showed the USD/JPY hover at the lower level of the 141.2 – 141.9 resistance band. Despite ending a six-day winning streak, the USD/JPY remained above the 50-day (140.170) and 200-day (136.692), sending bullish near and longer-term time price signals.

Notably, the 50-day EMA pulled away from the 200-day EMA, affirming the near-term bullish trend.

Looking at the 14-Daily RSI, the 53.63 reading signals a bullish outlook, supporting a breakout from the 141.2 – 141.9 resistance band to target 143. However, a USD/JPY fall through the 141.2 – 141.9 resistance band would bring the 50-day EMA (140.170) into play.

4-Hourly Chart

Looking at the 4-Hourly Chart, the USD/JPY faces strong resistance at 142. However, the USD/JPY sits above the 200-day (140.693) and 50-day (140.411) EMAs, sending bullish near and longer-term price signals.

Significantly, the 50-day EMA narrowed on the 200-day EMA, signaling a breakout from the 141.2 – 141.9 resistance band to target 143. However, a USD/JPY fall to sub-141 would bring the 200-day (140.693) and 50-day (140.411) EMAs into view. A fall through the 50-day EMA would give the bears a run at the 139.5 – 138.8 support band.

The 14-4H RSI reading of 62.13 sends bullish signals, with buying pressure outweighing selling pressure. Notably, the RSI aligns with the EMAs and supports a breakout from the 141.2 – 141.9 resistance band to target 143.