FxWirePro: USD/JPY recovery capped at 21-EMA, decisive break above required for further gains

USD/JPY chart - Trading View 

USD/JPY was trading 0.10% higher on the day at 106.06 at around 04:50 GMT.

U.S. dollar edges higher as sentiment remains buoyed on increased hopes of U.S. stimulus following President Donald Trump’s executive orders.

That said, escalating U.S.-China tussle keeps upside limited. China sanctioned 11 US officials in retaliation to similar moves made by the U.S. last week.

On the data front, Japan's current account surplus narrowed to the lowest level in five years in June.

The current account surplus was JPY 167.5 billion ($1.58 billion), bettered the median forecast at JPY 110 billion. 

However, it was the smallest monthly surplus since January 2015 and marked a significant deterioration from a JPY 1.177 trillion surplus in May. 

Exports plunged 25.7% in June from a year ago, having declined by 28.9% in May, while imports dropped an annual 14.4%, following a 27.7% annual fall in May. 

Major trend is bearish, but intraday charts show some upside in the pair. Stochs and RSI are biased higher and decisive close above 21-EMA could take the pair higher.

Major Support Levels: 

S1: 105.82 (5-DMA)

S2: 105.32 (Tenkan Sen)

S3: 104.55 (Lower BB)

Major Resistance Levels: 

R1: 106.72 (55-EMA)

R2: 107.25 (110-EMA)

R3: 108.14 (200-DMA)

Summary: USD/JPY keeps scope for upside. Oscillators are biased higher. Breakout above 21-EMA will buoy bulls in the pair. Major trend is bearish and hence upside may be limited.