USD/JPY Choppy Trading Continues – Brace for a Breakout
Arslan Butt • 2 min read
The USD/JPY pair closed at 106.142, after placing a high of 106.264, and a low of 106.054. Overall, the movement of the USD/JPY pair remained flat throughout the day. On Friday, the USD/JPY pair remained confined to a tight range of 20 pips, as the behavior of the pair was linked to that of US Treasury Yields. Moreover, the strong rebound in the US equity futures undermined the Japanese Yen’s safe-haven demand, and became one of the key factors that provided some support to the prices for the USD/JPY pair.
On the other hand, the US dollar remained depressed, amid doubts over the next round of the US fiscal stimulus measures. On Thursday, the US Senate on rejected a Republican bill that would have provided around $ 300 billion in new coronavirus aid. The Democratic opposition, prevented the bill from advancing, as they have been pushing for far more funding, amid the damage caused by the coronavirus pandemic.
The depressed US dollar kept the USD/JPY currency pair under pressure, and it continued moving in the small range and provided a flat candle at the end of the day. On the data front, at 04:50 GMT, the BSI Manufacturing Index from Japan rose to 0.1, compared to the predicted -36.1, providing support for the JPY. The Japanese PPI for the year remains flat, with expectations of -0.5%. The data supporting the Japanese Yen weighed on the USD/JPY pair, pushing it in a downward direction.
At 17:30 GMT, the Consumer Price Index for July rose to 0.4%, against the predicted 0.3%, supporting the US dollar. In July, the Core Consumer Price Index also rose to 0.4% from the expected 0.2%, bolstering the US dollar. The strong US dollar pushed the USD/JPY pair in an upward direction. At 23:00 GMT, the Federal Budget Balance showed a deficit of 200.1B against the predicted deficit of 238.7B. The mixed data movements from both currencies made it hard for the USD/JPY pair to move in a specific direction, so it was confined within a tight range on Friday.
On the coronavirus front, the rising number of cases from across the world also weighed on the USD/JPY pair, as the safe-haven Japanese Yen gained, amid the rising concerns and re-imposition of restrictions all over the globe. France, India and the UK are facing the threat of a second wave of the coronavirus, and have been forced to re-impose restrictions. These lingering coronavirus fears, in the absence of an approved vaccine, also raised fears regarding the recovery, weighing on the USD/JPY pair.
Daily Technical Levels
Pivot Point: 106.15