July 24, 2019 | SQUARED DIRECT – The US Dollar advanced over the Japanese Yen after a strong demand for the greenback across the board as traders are anticipating a 25 bps rate cut by the Fed instead of 50. Additionally, White House Economic Advisor Kudlow is hopeful on US-China trade talks, after Beijing promising to buy US agriculture products fueled optimism in the market place.
The 10-year Treasury yield also recovered, alongside the US equities to confirm the recent strength on the pair. Earlier this morning, Japan released a weaker than expected Manufacturing PMI data showing that the economy is still in a contraction mode, which created a temporary reaction in the market favoring the anti-risk Yen. However, the Dollar strength is expected to resume today as positive market sentiment prevails.
USDJPY technical analysis
The US Dollar broke above the bearish trend line, the 50 and the 200-day moving averages, signaling a strong bullish reversal on this pair. The bulls are currently retesting 108.10 (previous resistance, new support) after facing resistance at 108.30.
The buyers need to regain momentum and push the price beyond 108.30 for a possible 108.60 retest. If however the bullish momentum fades away and price breaks below 108.10, then the bears will take over in the short-term, pulling the price back towards 107.80.
Support: 108.10 / 107.80
Resistance: 108.30 / 108.60
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