FxWirePro: USD/JPY struggles to extend overnight gains, concerns of a potential recession weigh

Chart - Courtesy Trading View 

Spot Analysis:

USD/JPY was trading 0.53% lower on the day at 137.06 at around 09:20 GMT.

Previous Week's High/ Low: 137.85/ 134.12

Previous Session's High/ Low: 138.17/ 135.23

Fundamental Overview:

US Retail Sales fell to -0.6% MoM figure in November versus 0.1% expected and 1.3% prior. 

Further, manufacturing survey details from Philadelphia Fed and New York Fed disappointed for the said month.

US Industrial Production eased in November and the Jobless Claims also dropped for the week ended on December 09.

On the other side, the Japanese yen held marginal gains after data showed that overall business activity in the country barely managed to expand in December. 

The Flash au Jibun Bank Japan Manufacturing purchasing managers index (PMI) fell to 48.8 from 49 in the prior month, missing expectations for a reading of 49.

While, the Flash au Jibun Bank Japan Services PMI rose to 51.7 from 50.3 in November, boosted largely by increased tourism volumes.

Strength in the services sector largely offset a pronounced slowdown in manufacturing. 

Further, the prospect of rising interest rates in major economies brewed concerns over a potential recession, denting sentiment and boosting the yen's haven demand.

Technical Analysis:

- USD/JPY struggles to extend gains, upside remains capped at 21-EMA

- Price action has bounced off 200-DMA support, weakness only on break below

- MACD confirms bullish crossover on signal line

- Price action has edged above 200H MA and GMMA indicator has turned bullish on the intraday charts

Major Support and Resistance Levels:

Support - 135.54 (200-DMA), Resistance - 138.06 (21-EMA)

Summary: USD/JPY grinds sideways between major moving averages. Decisive breakout will provide a clear directional bias.