- USD/JPY recovers to nearly 113 after Monday sell-off
- Jerome Powell’s remarks strengthened the currency pair
- Technical indicators turning positive
Despite a sell-off in the USD at the start of the week, the USD/JPY gained ground yesterday and reached 112.92, marking its highest level in around six months.
It was trading this morning at 112.88.
Yesterday, US economic data showed 0.6% growth in industrial production in June. This followed a 0.5% dip in May and strengthened the USD.
The USD was further strengthened by Fed Chairperson Jerome Powell’s comments before Congress, where he indicated that the central bank will continue to increase the Fed Funds Rate gradually in line with its aim of achieving 2% inflation and maximum employment.
Speaking about the Trump government’s trade policy, he said that he supported free trade and that it was hard to say where the current trade negotiations would end.
The USD Index was last seen trading at 94.75, an increase of 0.5%.
Major stock exchanges in the US began the day higher and kept that momentum throughout the day. The S&P 500 ended 0.6% higher, and the Dow Jones Industrial Average added 0.25%.
The currency pair broke out of the range that held for nearly a week, which hints at more gains in the future. It could now be headed toward 113.38 – the highest level for the year to date.
Looking at the 4-hour chart, technical indicators are once again positive. The Momentum indicator is above its mid-line and heading upward. The RSI is, however, losing some of its gusto at around 71.
Moving averages are also now gathering upward momentum, although they are still way below the current level.
The nearest support level is around 112.60, while the closest resistance level to the upside is at 113.00.
