Japan’s Retail Sales Increased By 4.6% In August
USD/JPY made an attempt to settle above the resistance at 105.70 but was stopped at the 50 EMA at 105.80. Meanwhile, the U.S. dollar is trying to gain some upside momentum against a broad basket of currencies, providing additional support to USD/JPY.
Currently, the U.S. Dollar Index is attempting to get back above the 94 level. If this attempt is successful, the U.S. Dollar Index will head towards the nearest resistance level at 94.20 which will be bullish for USD/JPY.
Today, Japan reported that Retail Sales declined by 1.9% year-over-year in August. The analyst consensus called for a decline of 3.5%. On a month-over-month basis, Retail Sales increased by 4.6% as consumer activity started to recover after the blow dealt by the coronavirus pandemic.
Japan’s Industrial Production increased by 1.7% month-over-month in August compared to analyst consensus which called for growth of 1.5%. On a year-over-year basis, Industrial Production remained under significant pressure, declining by 13.3%.
Japan’s Housing Starts were down by 9.1% year-over-year. Just like other economic reports that were published today, the Housing Starts report was better than analyst expectations.
At this point, better-than-expected economic reports from Japan did not put any material pressure on USD/JPY as traders focused on the general dynamics of the American currency.
Technical Analysis
USD/JPY continues its attempts to get above the significant resistance level at 105.70. This resistance level has already been tested many times and proved its strength.
During the current trading session, USD/JPY made the most significant attempt to settle above the resistance at 105.70 but its upside move was stopped at the next resistance at the 50 EMA at 105.80.
Most likely, the resistance area between 105.70 and 105.80 will continue to serve as a major obstacle on the way up for USD/JPY so it will need additional upside catalysts to move above this level.
If this happens, USD/JPY will gain upside momentum and head towards the next significant resistance level at 106.30, although it may face some resistance at lower levels along the way.
On the support side, the nearest material support is still located at 105.20. A move below this level will open the way to the test of the next support at 104.90. #USD/JPY##FX#
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