USD/JPY consolidates gains above 113, up nearly 100 pips on the day
On Monday, boosted by the greenback recovery and an improved risk sentiment, the USD/JPY pair rose to its highest level since mid-May at 113.45. Following that move, the pair started consolidating its daily gains as the trading volume thinned out ahead of tomorrow's Independence Day holiday. As of writing, USD/JPY was trading at 113.38, gaining 0.85% on the day.
The US Dollar Index, which recorded heavy losses in the previous week, is headed for its first positive daily close since June 26, and is now at 95.95, up 0.58% on the day. Although today's rebound seems to be technical in nature, positive ISM PMI data provided an additional boost to the greenback in the second half of the day as it increased to 57.8 in June from 54.9 in May, beating the market consensus of 55.2.
On the other hand, the risk appetite, which lowers the demand for safer assets like the JPY, remains high on Monday as the solid performance of commodities fuel the lift in global equity indexes. The German DAX finished the day 1.22% higher while the UK's FTSE 100 gained 0.9%. On the NA side, the Dow Jones Industrial Average is up 0.6% and the S&P 500 is adding 0.15%.
- US stocks rally during early trade
The only relevant data in tomorrow's economic docket will be the Monetary Base from Japan, which is expected to ease to 19.2% from 19.4% in June on a yearly basis.
Technical outlook
With today's strong upsurge, the pair is looking to close the day above the 200-DMA for the first time since late May. 113.85 (May 15 high) could be seen as the first technical resistance for the pair ahead of 114.35 (May 10 high) and 115 (psychological level). On the downside, supports are located at 113 (psychological level), 112.55 (200-DMA) and 111.55 (50-DMA).
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