The U.S. dollar is still reeling from the weaker than expected April non-farm payroll report and surge in monthly headline and core consumer prices. Monthly factory gate prices in the United States also rose.
Even though the Federal Reserve views the spike in prices as transitory. The dollar, because of this, took a hit as the U.S. central bank is not very likely to taper their monthly asset purchase program or change monetary policy anytime soon.
The Federal Reserve feels the U.S. economy has a long road ahead for full employment and sustainable inflation.
Japan will publish quarterly gross domestic product data on Monday as well as monthly machine tool orders. The United States will release the monthly Empire State manufacturing index. The European Union is also publishing quarterly gross domestic product figures.
Also, looking at the above USD/JPY daily MT 4 price action chart, the dollar remain above the 38.2 percent Fibonacci level. The almighty dollar is also above the key 108.60 yen support level. The greenback’s gain from Wednesday remains intact, for now.
US Dollar Technical Analysis (USD/JPY)
Immediate technical support lines up at 109.35 yen. This is the base of the 26 March head and shoulder’s chart formation. On the upside, the first upside barrier is at 109.70 yen. This level has capped USD/JPY gains over the past several trade days.
The benchmark USD/JPY currency market is likely to consolidate around 108.60 yen to 109.85 yen ahead of this week’s Federal Reserve’s monetary policy meeting minutes release.
Forex traders will also look at first quarter economic data out of Japan due on Monday. Japan’s economy is expected to contract in the first quarter which could send this market higher.
The 14 day relative strength index (RSI) is looking positive around 56 and the 21 day simple moving average at 108.75 yen is ahead of the downside barrier in play at 108.60 yen. The one hundred (100) day simple moving average lines up at 106.90 and the 200 day simple moving average is at 105.95 yen.