The USDJPY pair extended its sideways consolidative price action and remained confined in a narrow trading band, just above mid-109.00s.
January 21, GKFX – The pair struggled to a firm direction and was seen consolidating last week's goodish up-move to monthly tops, with the latest signs of a slowdown in China underpinning the Japanese Yen's safe-haven status and keeping a lid on any follow-through up-move on the first trading day of a new week.
Growing signs of weakness in the Chinese economy
Official data released this Monday showed that China’s economy grew by an annualized 6.4% in the three months to December, making the third consecutive quarter of slowing growth and also the slowest rate of growth since the global financial crisis.
The negative factor, to a larger extent, was offset by growing optimism over the US-China trade tensions. This coupled with a follow-through uptick in the US Treasury bond yields, which helped the US Dollar to hold steady near two week tops, further collaborated towards limiting any meaningful downside.
Meanwhile, traders also seemed reluctant to place any aggressive bets amid absent fundamental catalyst and a bank holiday in the US. Moving ahead, the latest BoJ monetary policy update, due to be announced on Wednesday will now be looked upon for some fresh directional impetus.
USDJPY technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The USDJPY pair trades around 109.60 after falling to 109.47, with the downside limited according to the 4 hours chart, in where technical indicators are already recovering in positive ground, following a downward correction from overbought levels.”
“In the same chart, the pair is trading above its 100 SMA, currently at around 108.95 while the 20 SMA keeps advancing below the current price and above the larger one. The pair spent the day trading below Friday's close of 109.76, now an immediate short-term resistance, with gains beyond it, opening doors for an approach to the critical 110.00 figure,” she added further.
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