USD/JPY to rally on a break above 107.50

USD/JPY trades around 107.20, not far from where it settled last Friday, and while the pair continues to offer a neutral technical stance, could rally once above 107.50, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“Japan published May Retail Sales, which were up 2.1% MoM, better than anticipated, and down by 12.3% when compared to a year earlier, missing the market’s expectations. Large Retailers’ Sales for the same month fell 16.7% against -11.7% expected. The US will publish today May Pending Home Sales, foreseen at -44.6% from -33.8% in the previous month. The country will also release the Dallas Fed Manufacturing Business for June, expected at -59 from -49.2.”

“The 38.2% retracement of its latest daily slump caps the upside at around 107.50. In the 4-hour chart, the 20 SMA advances below the current level, while the 100 SMA eases above it. Technical indicators, in the meantime, lack directional strength, the Momentum around its 100 level, and the RSI stable at 55.” 

“The USD/JPY pair would need to move beyond the Fibonacci resistance at 107.50 to gather positive momentum, while the risk will turn south on a break below 106.95.”