In early Asia, USDJPY strengthened though its rise was short-lived
At the beginning of the new trading week, in early Asian hours, USDJPY moved 50 points up, however was not able to get a foothold above 105.75 and returned to the 105.60 region but stayed in the green zone.
The pair’s rise was determined by two factors. First of all, the yen was pressured by weak retail sales for July that contracted more than expected (-3.3% vs -2.5% m/m forecasted and -2.8% y/y vs -1.7% y/y estimates). However, Japan’s preliminary industrial production for July bettered the expectations (8.0% vs 5.0% m/m expected), which prevented the major from sustainable gains and kept the lead on its move north.
Meanwhile, on Friday, Japan PM Abe announced his decision to resign due to health issues meaning that the place would soon be vacant, which caused some uncertainties and weakened JPY helping the pair to rise. Some rumors say that Cabinet Secretary Suga is going to propose his candidacy however the speculations are not confirmed yet.
Further, the US FDA’s head said that he would like to fast track vaccine approval outside of normal scientific procedures and the Chinese vaccine was authorized to be used in emergency cases. Both headlines heated up risk-on, which provoked the major’s decline since the US Dollar was still unable to recover from recent Powell’s commentaries.
Today, the economic calendar is nearly empty though in the NA session the US will release the Dallas Fed Manufacturing Outlook Survey and Fed’s Clarida will deliver his speech. Later, Japan will publish its unemployment rate for July and capital spending for Q2.
From the technical point of view, the DXY trades with daily losses in the 92.33 region and while USDJPY keeps under its MA 200 H1 (today at 105.90), the bears will likely stay in the lead. The support is seen at 105.10-20, 104.55, and 104.20. The resistance is pegged at 106.10, 106.90, and 107.35.