The USDJPY pair is showing a lack of upward momentum near its highest level of the year. It is gently pushing the four-day uptrend.

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• USD/JPY lacks upside momentum near the Year-To-Date high, prods four-day uptrend.

The pair currently trades last at 144.703.

The previous day high was 144.82 while the previous day low was 143.29. The daily 38.2% Fib levels comes at 144.23, expected to provide support. Similarly, the daily 61.8% fib level is at 143.87, expected to provide support.

USD/JPY bulls run out of steam below 145.00, making rounds to 144.80-90 during early Friday in Europe, as market players struggle for clear directions amid mixed clues. Also challenging the Yen pair is the cautious mood ahead of the mid-tier US data.

That said, the 10-year Treasury bond yields in the US and Japan fade the previous day’s bullish momentum while making rounds to 4.10% and 0.585% by the press time. In doing so, the yields portray the market’s lack of confidence in the major central bankers’ statements suggesting nearness to the peak rates.

On Thursday, unimpressive US inflation data allowed the Fed policymakers to cheer the victory over price pressure but the traders need more details to welcome the policy pivot concerns.

Talking about the data, the headline Consumer Price Index (CPI) for July matched market forecasts to reprint 0.2% MoM figures. However, the yearly CPI improved slower-than-expected 3.3% to 3.2% YoY for the said month, versus 3.0% previous readings, marking the first acceleration in the annual rate in 13 months.

Following the statistics, a slew of policymakers from the Federal Reserve (Fed) crossed wires while conveying the US central bank’s hard-earned victory on inflation. However, their tones appeared less convincing for doves and joined the risk-negative concerns about China to fuel the US Treasury bond yields afterward.

Philadelphia Federal Reserve Bank President Patrick Harker raised a toast to the Fed’s progress in its fight against inflation and was joined by Boston Federal Reserve President Susan Collins and Atlanta Federal Reserve Bank President Raphael Bostic to cheer the softer US CPI. However, San Francisco Fed President Daly turned down the cheers for their victory while saying, “There’s still more work to do.”

On the other hand, China allows the local governments to use the provincial-level governments to raise about 1 trillion yuan ($139 billion) via bond sales to repay the debt of local-government financing vehicles (LGFV) and other off-balance sheet issuers, per Bloomberg. The news justifies the market’s confidence in the Chinese policymakers’ capacity to avoid recession and weigh on the US Dollar, via a slightly positive market mood. Additionally, the fears of witnessing more geopolitical tussles between the West and China, mainly due to the US restriction on investment in China technology companies and the likely repeat of the measures by the UK and European Union, weighed on the sentiment and put a floor under the USD/JPY price.

It’s worth noting that the Japanese officials have been defending the easy-money policy and keep the USD/JPY on the front foot even if the fears of market intervention by the authorities around the 145.00 round figure prod the Yen pair buyers of late.

Moving on, the US Producer Price Index (PPI) for July, the preliminary readings of the University of Michigan’s (UoM) Consumer Sentiment Index (CSI) for August and the UoM 5-Year Consumer Inflation Expectations for the said month will also be important to watch for clear directions of the USD/JPY pair.

A daily closing beyond the 145.10-20 region comprising the previous peak and a three-week-old rising resistance line becomes necessary for the USD/JPY bulls to keep the reins. However, the overbought RSI (14) line prods the upside momentum of late.

Technical Levels: Supports and Resistances

USDJPY currently trading at 144.71 at the time of writing. Pair opened at 144.75 and is trading with a change of -0.03% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 141.44, 50 SMA 141.6, 100 SMA @ 138.37 and 200 SMA @ 136.49.

The previous day high was 144.82 while the previous day low was 143.29. The daily 38.2% Fib levels comes at 144.23, expected to provide support. Similarly, the daily 61.8% fib level is at 143.87, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 143.75, 142.75, 142.22
• Pivot resistance is noted at 145.28, 145.81, 146.81

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