USD/JPY is showing little movement in the Monday session. In the North American session, the pair is trading at 106.28, up 0.04% on the day.
Japanese GDP looms
USD/JPY enjoyed a strong week, as the US dollar showed broad gains. The pair gained close to one percent, its best week since early June. With US markets closed for Labour Day, investors and traders will be able to give their full attention to a host of Japanese indicators later in on Monday. The spotlight will be on Japan’s GDP for the second quarter, which was marked by severe economic conditions due to the Covid-19 pandemic. The initial release came at -7.8% and analysts are bracing for a downward revision, with a forecast of-8.1%. A contraction will mark a third successive contraction in GDP, as the Japanese economy is limping badly. Investors could give a thumbs-down to the Japanese economy after the GDP release, so we could see the Japanese yen lose ground.
Japanese consumer releases are also projected to head lower. Average Cash Earnings is expected to post a fourth successive decline, with an estimate of -1.6%. Household Spending has not mustered a gain since September, and the estimate for July stands at -3.6%.
USD/JPY Technical Analysis
USD/JPY gained ground in the Asian session but then reversed directions. The pair is flat in the European session
- 105.50 is the next support line. This is followed by support at 104.77
- There is resistance at 106.76. The next resistance line is at 107.29
- USD/JPY continues to put downward pressure on the 10-day MA. If the pair breaks below this line, it would be a bearish signal for the pair
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