USD/JPY bounce curtailed as intervention risks linger
July 16 (Reuters) -USD/JPY bounced back during Tuesday’s trade with a topside surprise in U.S. retail sales providing a boost, which also breaks the run of softer U.S. data, though, traders appear somewhat cautious in chasing USD/JPY aggressively higher given the lingering threat of further intervention.
The Bank of Japan’s balance sheet data indicates that Japanese officials may have intervene on Friday, spending an additional $13.5bln. In turn, the active approach that officials look to have taken may mean that rebounds in the pair are shallow. However, with major support at the 55DMA (157.58) continuing to hold, dip buying is likely to persist. Resistance resides at 159.45-50, marking the post-intervention high and 50% fib of the CPI led drop.
On Monday, Federal Reserve Chair Jerome Powell refrained from providing any signals on when rate cuts might commence. Currently, the market is fully pricing in a September rate. Looking ahead, Fed’s Christopher Waller is scheduled to speak on Wednesday at 9:35 EDT, which will be of interest given that for the large part he has been the lead indicator for the committee.
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USDJPY hourly today https://tmsnrt.rs/3xNe3De
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
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