The USD JPY is experiencing a calm morning as investors eagerly anticipate the release of US retail sales figures. These numbers are expected to provide crucial insight into the likelihood of a soft landing for the economy, following the positive consumer sentiment data. The outcome of these retail sales figures will heavily influence the market sentiment, impacting the USD JPY exchange rate.
Although the USD/JPY currently lacks economic indicators from Japan or China to drive early session activity, the Tertiary Industry Activity Index figures will draw interest later in the Asian session. As to analysts, there's expected to be a slight 0.4% growth in May, which is lower than the 1.2% increase observed in April. However, it's not anticipated that these figures will have a significant influence on the Bank of Japan's decisions regarding monetary policy.
In the US session, market participants can expect a busy day on the economic calendar, with a particular focus on US retail sales, industrial production, and business inventories. Among these, retail sales figures will be the center of attention. Economists predict a 0.5% growth in June, surpassing the 0.3% increase recorded in May. Positive retail sales data could further reinforce the notion of a soft landing, supporting market sentiment.
Examining the daily chart, the USD JPY managed to avoid dropping below the psychological level of 138.5. However, it remained below the resistance band of 139.5 - 138.8 and the 50-day EMA (139.996). Notably, the narrowing gap between the 50-day and 200-day EMAs indicates bearish momentum in the short term but bullish momentum in the long term. The 14-Daily RSI reading of 36.39 suggests a bearish outlook, targeting support levels around 137.50 and 136.3 - 135.6. A breakthrough above the upper level of the resistance band could bring 139.5 and the 50-day EMA back into focus.
Analyzing the 4-Hourly Chart, it becomes evident that the USD JPY is facing strong resistance at 139. The exchange rate remains below both the 50-day (140.156) and 200-day (140.845) EMAs, signaling bearish momentum. The 14-4H RSI reading of 43.54 aligns with the bearish sentiment, suggesting a potential decline to sub-137.5 and targeting the support band at 136.3 - 135.6. The market sentiment, as indicated by the technical analysis, will be closely monitored by Forex and crypto traders.
The upcoming release of US retail sales figures and its impact on the USD JPY exchange rate has significant implications for Forex traders. Positive retail sales data, coupled with the market's expectation of a soft landing, may bolster the USD against the JPY. Traders can leverage this information to make informed decisions on their Forex trades, considering the potential effects on the USD JPY pair. Understanding the technical analysis and resistance levels can assist traders in identifying entry and exit points, managing risk, and optimizing their Forex trading strategies in light of the evolving market dynamics.