USD/JPY has been quite impulsive amid the recent bullish momentum. The price is holding at the edge of 110.00-50 resistance area with a daily close. Ahead of macroeconomic data from the US this week, JPY has been quite solid amid the recently published economic reports while the Bank of Japan is busy with the wage recalculation process.
Recently Bank of Japan's Governor Kuroda today stated that there is no change in the central bank's assessing the economy after finding errors which forced the labor ministry to revise monthly wages data. The labor ministry is expected to recalculate data by this week that is expected to dent policymakers' hopes for sustained inflation. Recently BoJ Monetary Base report was published with a slight decrease to 4.7% from the previous value of 4.8% which was expected to be worse, decreasing towards 4.6%.
On the USD side, the Federal Reserve is currently quite patient to take decisions on interest rates. Citing Cleveland FED President Mester, it is the best approach in the current situation. Nevertheless, to boost the US economic growth the interest rates remain appropriate to current GDP rates, so further rate hikes are needed. Today US ISM Non-Manufacturing PMI report is going to be published which is expected to decrease to 57.2 from the previous value of 57.6 and later President Donald Trump is also going to speak about the US-Mexico deal which is expected to contribute to USD gains.
Meanwhile, JPY is quite strong in comparison to USD. Upcoming economic report and events in the US could make a bearish impact on USD. Thus, JPY may hold the upper hand in the short term.
Now let us look at the technical view. The price is currently residing at the edge of 110.00 area while developing Bearish Divergence in the MACD Histogram. As the price remains below 110.50 area with a daily close, there are certain chances for the bears to push the price lower towards 108.50 support area in the coming days before the price starts to climb higher in the future.
SUPPORT: 108.50
RESISTANCE: 110.00-50
BIAS: BEARISH
MOMENTUM: VOLATILE
