Strong US Data Sends USDJPY Higher As Recession Fears Fade

Summary:
• The USDJPY trading pair climbed up more than 1.1 percent in Thursday's New York session, helped by strong jobs and retail sales data.

The US dollar edged up against the Japanese yen on Thursday, helped by forecast-beating US labour market and Retail Sales data. The GBPUSD was up by 1.1 percent in the New York session, having hit a two-week high of 149.32 before easing to 148.92 at the time of writing. The move saw the US dollar decisively break out to the upside after being subdued for the significant part of the morning session following Japan’s forecast-beating GDP data read on Wednesday.

US Initial Jobless Claims fell for the second week in a row, coming in at 227k, which was lower than the forecast figure of 236k. Meanwhile, Retail Sales grew at a rate of 1 percent in July, recovering from June’s contraction of -0.2 percent and exceeding the forecast rate of 0.4 percent. Similarly, Core Retail Sales (excluding automobiles) grew faster than expected at 0.4 percent versus the forecast 0.1 percent.  These figures likely put to rest speculation that the US economy could have entered a recession and lend fuel to the USDJPY pair. Also, that reduces the prospects of 50 basis point slash by the Fed in September. Yields on US treasury bonds spiked in the aftermath of the data, with benchmark 10-year bonds up by 10 basis points as of this writing.

USDJPY momentum, support and resistance levels

The USDJPY currency pair has broken above the upper Bollinger band on the 2-hour price chart, signaling strong bullish control. In addition, the RSI is at 70, adding support to the upside view.

Meanwhile, the 30-minute chart signals control by the buyers above the pivot at 148.73. That could see the first resistance encountered at 149.10. With the buyers in control at that level, they could generate the momentum to break above that mark and test 149.50. On the other hand, a move below 148.73 will favour the sellers to take control. The downward momentum will likely see the establishment of the first support at 148.20. However, extended bearish control could clear the path for the downside momentum to break below that level and invalidate the upside narrative. Also, it could extend the decline to test 147.85.