The USDJPY currency pair at a rate of 139.337 is gaining buyers to reduce losses experienced during the day, which is the first time in three days.

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• USD/JPY picks up bids to pare intraday losses, the first in three days.

The pair currently trades last at 139.337.

The previous day high was 139.77 while the previous day low was 139.06. The daily 38.2% Fib levels comes at 139.5, expected to provide resistance. Similarly, the daily 61.8% fib level is at 139.33, expected to provide support.

USD/JPY bounces off intraday low as it consolidates the first daily loss in three as Tokyo opens for Tuesday’s trading. Even so, the Yen pair remains mildly offered on a day around 139.55 by the press time.

That said, the Yen pair’s latest run-up could be linked to the downbeat Japan data that justifies the Bank of Japan (BoJ) Officials’ dovish bias. Earlier in the day, Japan’s Business Sentiment Index (BSI) Large Manufacturing Conditions Index for the second quarter (Q2) dropped to -0.4 versus 0.1 expected and -10.5 prior.

On Monday, Japan’s Producer Price Index (PPI) for May dropped for the fifth consecutive month to 5.1% YoY from 5.8% previous readings and 5.5% market forecasts. That said, monthly figures also disappointed Yen traders with -0.7% MoM outcome, versus -0.2% expected and 0.2% prior.

It should be noted that Bank of Japan (BoJ) policymaker Masazumi Wakatabe said in a Bloomberg TV interview early Monday, “It’s still too early to call that this inflation has been sustainable and stable.” That said, BoJ’s Wakatabe clearly ruled out options of any move by the Japanese central bank in the June meeting as he guessed that at the June meeting, there would be nothing.

Elsewhere, the US Dollar Index (DXY) struggles to defend the two-day winning streak while fading the week-start rebound from the lowest levels since May 23 as market players place dovish bets on the US Federal Reserve (Fed) ahead of Wednesday’s Federal Open Market Committee (FOMC). Even so, the increase in the bets favoring the Federal Reserve’s (Fed) 0.25% rate hike in July prod the sentiment and put a floor under the US Dollar, as well as the USD/JPY price. It should be noted that the CME’s FedWatch Tool suggests nearly limited scope for the US central bank to act.

A trade dispute is developing after the US expands its ban on imports from Xinjiang, which in turn weigh on the risk profile and the USD/JPY price. China vows to protect China firms against any US sanctions, per Reuters. Recently, Bloomberg released prepared remarks of US Treasury Secretary Janet Yellen’s scheduled Testimony in front of the House Financial Services Committee as she said that the International Monetary Fund (IMF) and the World Bank (WB) serve as important counterweights to non-transparent, unsustainable lending from others, like China.

It should be noted that the cautious mood ahead of the US inflation data and the looming $3.0 trillion worth of bond issuance from the US Treasury Department, due to the debt-ceiling deal, also exert downside pressure on the sentiment and the USD/JPY price. Amid these plays, the US 10-year and two-year Treasury bond yields keep the late Monday’s retreat near 3.73% and 4.58% at the latest.

Moving on, the bond market moves and risk catalysts will be important to determine the short-term moves of the USD/JPY pair. That said, the US Consumer Price Index (CPI) figures for May will be in the spotlight as the Fed decision looms on Wednesday. It’s worth noting that the market forecasts of witnessing no change in the Core CPI MoM figure of 0.4% gain major attention as softer figures could push back the July rate hike concerns and may not allow the Fed to sound hawkish. The same will weigh on the US Dollar and can please the Yen pair bears.

Also read: US Inflation Preview: Why the US Dollar is more likely to fall than rise, three scenarios

The RSI (14) line’s retreat joins the increasing strength of the bearish MACD signals to challenge the USD/JPY buyers within a two-week-old symmetrical triangle, currently between 139.90 and 138.85.

Technical Levels: Supports and Resistances

USDJPY currently trading at 139.65 at the time of writing. Pair opened at 139.6 and is trading with a change of 0.04% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 139.18, 50 SMA 136.2, 100 SMA @ 134.59 and 200 SMA @ 137.29.

The previous day high was 139.77 while the previous day low was 139.06. The daily 38.2% Fib levels comes at 139.5, expected to provide resistance. Similarly, the daily 61.8% fib level is at 139.33, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 139.19, 138.78, 138.49
• Pivot resistance is noted at 139.89, 140.18, 140.59

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