FxWirePro: USD/JPY shows minor recovery from 3-month lows, focus on US Retail Sales data for impetus

Chart - Courtesy Trading View 

USD/JPY was trading 0.58% higher on the day at 139.54 at around 05:45 GMT, outlook bearish.

The pair is showing a minor recovery from 3-month lows hit on Friday's trade, but recovery attempts lack traction.

A slowdown in US October’s inflation suggests exhaustion in the inflationary pressures, however, a pause in Fed policy tightening will take sufficient time.

Fed Governor Christopher Waller has backed 50 basis points (bps) rate hike expectations for the December meeting but has cleared that rates won’t fall until clear evidence of a slowdown in inflation.

Looking forward, US Retail Sales data for October will remain in focus, which is likely to print higher at 0.9% against the former release of 0%.

Further, Tuesday’s Japan Gross Domestic Product (GDP) data will also remain in focus. The data is seen lower at 0.3% vs. the prior release of 0.9% on a quarterly basis.

The Bank of Japan (BOJ) has been citing warning signals of a slowdown due to external economic shocks and the chances of the inflation rate returning below 2%.

BoJ Governor Haruhiko Kuroda said earlier on Monday that “abnormally one-sided, sharp yen weakening appears to have paused, thanks partly to government’s FX intervention.”

Major Support Levels: 

S1: 138.14 (Cloud base)

S2: 132.83 (200-DMA)

Major Resistance Levels: 

R1: 140.11 (110-EMA)

R2: 142.27 (5-DMA)

Summary: USD/JPY consolidates break below 110-EMA. Technical bias for the pair remains bearish, breach below daily cloud will plummet price.