USD/JPY erases gains, turns negative below mid-110s
After refreshing its session high at 110.83 during the first half of the American session, the USD/JPY pair failed to extend its upsurge and retraced its daily earnings. As of writing, the pair was trading at 110.47, losing 0.25% on the day.
Earlier in the session, the upbeat macro data from the U.S. brought a fresh greenback buying wave, pushing the US Dollar Index to a fresh weekly high at 93.77. As the impact of the data faded away later in the session, the DXY gave back a portion of its gains, allowing the USD/JPY pair to return to the negative area. At the moment, the index is at 93.50, still up 0.21% on the day.
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In addition to the greenback's falter, the risk appetite also seems to have lost strength in the session with the major equity indexes in the U.S. struggling to sustain their rally. In fact, after refreshing a record high earlier in the session, the Dow Jones Industrial Average lost its traction and is now losing 4 points. In the meantime, a recent article in the Washington Post claimed that according to U.S. intelligence officials, North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles, further increasing the geopolitical tension.
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With no more data left in the remainder of the day, the pair is likely to stay in a tight range. On Wednesday, investors will look at unit labor costs and nonfarm productivity data from the United States for the second quarter of 2017.
Technical outlook
111.00/05 (psychological level/20-DMA) area remains as the first technical hurdle ahead of 111.45 (100-DMA) and 112.20 (Jul. 26 high). On the downside, supports could be seen at 110 (psychological level), 109.60 (Jun. 12 low) and 108.95 (Jun. 14 low). The RSI on the daily graph is moving sideways around the 50 mark, showing neutral conditions in the near-term.