USD / JPY descends from daily highs, seems to close the week lateralized around 110.00

• USD / JPY rose to a daily high of 110.35 on Friday.
• The 10-year US Treasury yield erased its daily recovery gains.
• The US Dollar Index remains in positive territory after mixed US data.

After closing the previous two trading days in negative territory, the pair USD/JPY it bounced and hit a daily high of 110.35 early in the US session. However, the pair struggled to preserve its bullish momentum and was last seen gaining 0.22% on the day at 110.10. During the week, USD / JPY remains on track to close virtually unchanged.

The broad-based USD strength helped the USD / JPY gain traction ahead of the weekend. The risk averse market environment helped the dollar find demand as a safe haven and the US dollar index (DXY) advanced to 92.75 before entering a consolidation phase. At the moment, the DXY is up 0.12% to 92.67.

Meanwhile, the release of mixed macroeconomic data from the US did not elicit a notable market reaction. The US Census Bureau reported that retail sales increased 0.6% in June, beating market expectations of a 0.4% decline. On a negative note, the University of Michigan Consumer Sentiment Index fell to 80.8 in July’s advanced reading from 85.5 in June, disappointing analysts’ estimate of 86.5.

Short-term outlook for USD / JPY

Karen Jones, Head of FICC Technical Analysis Research Team at Commerzbank, believes that USD / JPY could continue to push lower with a break below the July low at 109.54.

“The recent USD / JPY bounce failed along the 2021 uptrend line, the outlook remains negative,” notes Jones. “Attention is currently on the July low at 109.54. Failure to do so would place the late-May low of 108.56 and April’s low of 107.48 back on the map. Resistance above this week’s high at 110.70 it peaks at 110.97 in March and also reaches 111.11 on June 24, as well as the current July high at 111.66 “.

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