USD/JPY finds resistance at 110.40, consolidates gains above 110.00

USD/JPY is holding above 110.00 and is consolidating daily gains. The pair peaked after the release of US economic data at 110.42, the highest levels in two weeks. During the last hours, it remained below that level but on top of 110.00. 

At the moment it trades at 110.15/20, 55 pips above yesterday’s close and almost 200 pips above Tuesday’s low. The US dollar rally that started yesterday continues today. 

A boost from US data 

The two relevant reports from the US showed higher-than-expected numbers, supporting the recovery of the greenback and more. The ADP report for August came at 237K, significantly above the 185K expected and July numbers were revised higher. Then came the second estimate of Q2 GDP growth that showed the economy expanding at a 3.0% (above the previous 2.6% and on top of the 2.7% of market consensus). 

The bond market remained steady despite the report and the USD rally. In Wall street, the Dow Jones failed to hold go gains and it was down 0.3%. The decline in equity prices limited the upside in USD/JPY. 

Technical outlook 

Valeria Bednarik, Chief Analyst at FXStreet, point out that the pair is mostly positive in the near-term, “as in the 4 hours chart, technical indicators keep heading north near overbought territory, whilst the price is well above its 100 SMA that anyway maintains a bearish slope”. She adds that the in the same chart, selling interest seems to be aligned around a bearish 200 simple moving average around 110.40. “Should the pair accelerate beyond this last, the recovery has room to extend up to 110.94, August 16th high.”