USD/JPY grinds higher despite a weaker DXY Ahead of a busy week, the the US dollar index has started Monday's session on the backfoot, largely thanks to a relief rally on the EUR/USD exchange rate. But against currencies where the central bank is more dovish than the Fed – most notably against the likes of the Japanese yen and Chinese yuan - the dollar remains supported.
After Friday’s latest inflation data (core PCE price index), which was bang in line with expectations, more key US economic data is to come over the next couple of weeks. The June non-farm jobs report is due on Friday, followed by the CPI on July 11. This week’s other important data releases include the ISM manufacturing and services PMIs, ADP private payrolls, JOLTS Job Openings, and FOMC minutes.
Given how the USD/JPY has been able to grind higher despite some weakness in US data, it is not unreasonable to expect that trend to continue unless the BOJ/MoF potentially intervenes in FX markets.
Key support comes in around 160.00 now, which was the previous multi-decade high that was hit in April. Below this level, there is not much in the way of obvious support levels to watch until 157.70 area.
Meanwhile, on the upside, the 127.2% Fibonacci extension level of the drop from April high comes in at just below 162.50, making this our next bullish objective for this pair.
By Fawad Razaqzada, market analyst at FOREX.com
