USD/JPY erases daily gains as DXY remains near 15-month lows
The USD/JPY pair, which tested the 111 handle in the early NA session, gave back its earnings and turned negative in the last hour as the US Dollar Index pushed lower to a fresh 15-month low at 92.60. As of writing, the pair was trading at 110.40, virtually unchanged on the day.
Today's macro data from the U.S. didn't receive a clear response from the markets as the ADP report showed that the private employment growth in July came in below the market expectations while the June data was revised up. However, the greenback caught a fresh selling wave in the session after the Cleveland Fed President Loretta Mester gave her remarks on the monetary policy. Although Mester didn't sound necessarily dovish, she didn't give any clues regarding the start of the balance sheet reduction nor the timing of the next rate hike. At the moment, the US Dollar Index is at 92.63, losing 0.3% on the day.
- US: Private sector employment increased by 178,000 jobs from June to July - ADP
- Fed's Mester: May take couple months to see uptick in U.S. prices
In the meantime, boosted by the robust second quarter earnings reports, major equity indexes in the U.S. started the day higher with the Dow Jones Industrial Average surpassing the 22,000 for the first time during the first half of the session, keeping the pair's losses limited for the time being.
There are no more data left in the remainder of the session and investors will look upon San Francisco Fed President Williams' speech for a fresh catalyst.
Technical outlook
The RSI indicator on the H4 chart is moving sideways near the 50 mark, showing a short-term neutral outlook for the pair. On the downside, 110 (psychological level) could be seen as the initial support ahead of 109.60 (Jun. 12 low) and 108.95 (Jun. 14 low). On the upside, resistances locate at 111 (daily high/50-DMA), 111.75 (100-DMA) and 112.15 (20-DMA).
- USD/JPY still bearish, eyes on 109.50 – UOB