Chart - Courtesy Trading View
Spot Analysis:
USD/JPY was trading 0.77% higher on the day at 134.34 at around 11:15 GMT
Previous Week's High/ Low: 135.58/ 131.73
Previous Session's High/ Low: 133.58/ 132.94
Fundamental Overview:
The US dollar gains traction for the third successive day amid hawkish Fed expectations, despite last week's softer US CPI print.
Fed officials stressed that it is too soon to declare a victory on inflation and have maintained a hawkish tone, suggesting the Fed would stick to its policy tightening.
On Monday, US NY Empire State Manufacturing Index for August fell to -31.3 from 11.1 in July, missing 8.5 market forecasts by a big margin.
Further, the US August NAHB homebuilder confidence index also fell to 49 versus 55, its lowest level since the initial months of 2020.
Focus for today remains on the US Building Permits, Housing Starts and Industrial Production numbers for July for fresh impulse.
That said, FOMC Minutes will be crucial amid indecision over the US central bank’s next move.
Technical Analysis:
- USD/JPY has broken above 55-EMA which was capping upside from the past few sessions
- Price action is extending bounce off cloud base support
- Oscillators are now biased higher, momentum is turning bullish
- MACD is on verge of bullish crossover on signal line
Major Support and Resistance Levels:
Support - 133.73 (55-EMA), Resistance - 134.45 (21-EMA)
Summary: USD/JPY eyes cloud top. Break above will fuel further gains in the pair.
