FxWirePro: USD/JPY rangebound below 134, caution seen ahead of key US NFP data

Chart - Courtesy Trading View 

USD/JPY was trading rangebound at 133.80 at around 05:30 GMT, with session high at 134.14 and low at 133.41.

The pair is consolidating above daily cloud support, investors cautious ahead of key US NFP data due Friday.

China’s actions in the Taiwan Strait appear to weigh on the market sentiment, keeping investors wary.

On the data front, US ISM Services PMI for July rose to 56.7 from 55.3 prior and the market expectation of 53.5.

The final reading of the US S&P Global Services PMI for July dropped to 47.3, marking the first contraction in two years, from 52.7 in June and the flash estimate of 47.

US dollar recovered its poise overnight after the release of an upbeat ISM Services PMI, which indicated that the local economy remains resilient.

Meanwhile, Fed officials reinforce market speculation for aggressive tightening, putting a 75 bps rate hike back on the table for September.

Later in the day, focus remains on US Good and Services Trade Balance for June, expected $-80.1B versus $-85.5B prior.

Further, the weekly Initial Jobless Claims, expected 259K versus 256K prior, will decorate the calendar.

Major Support Levels: 

S1: 133.14 (5-DMA)

S2: 131.68 (Cloud base)

Major Resistance Levels: 

R1: 134.46 (200H MA)

R2: 135.18 (21-EMA)

Summary: USD/JPY finds strong support at daily cloud, any major weakness only on decisive break below. On the flip side, retrace above 21-EMA will see upside continuation.