FxWirePro: USD/JPY slips lower ahead of U.S. GDP data, UST yields undermine demand for USD

USD/JPY chart - Trading View 

Spot Analysis:

USD/JPY was trading 0.15% lower on the day at 109.75 at around 05:20 GMT

Previous Week's High/ Low: 110.59/ 109.06

Previous Session's High/ Low: 110.28/ 109.72

Fundamental Overview:

US dollar tracked the US Treasury yields and remained under pressure, dragging the pair lower on Thursday. 

The US Dollar Index (DXY), remained on the backfoot amid falling US Treasury yields, extends weakness for the 4th straight session. 

The Fed at its latest monetary policy’s meeting left the target range for its federal rates unchanged at 0-0.25%.

The assets purchasing also remained unchanged at the current pace of  $120 billion. Tug-of-war between growth and inflationary concerns took a toll on Fed’s decision.

Fed Chair Jerome Powell cautioned that although there has been substantial improvement in the economy still there is a way to go before the central bank would adjust its ultra-accommodative policy.

Dollar erased gains after the Fed decision and on Powell’s dovish comments. DXY was down 0.13% at 92.14 at the time of writing. 

Investors now await US Core Personal Consumption Expenditure (PCE), Gross Domestic Product (GDP) and Weekly Initial Jobless Claims data for further impetus.

Technical Analysis:

- USD/JPY extends weakness below 110 handle

- GMMA indicator on the intraday charts shows major and minor trend are bearish

- Stochs and RSI are biased lower, RSI has slipped below 50 mark

- MACD is below zero, price has slipped into cloud, chikou span is biased lower

Major Support and Resistance Levels:

Support - 109.51 (23.6% Fib), Resistance - 110.02 (200H MA)

Summary: USD/JPY extends weakness ahead of key US data. Technical bias is bearish. Scope for further downside.