The Yen weakened during the last few sessions, as the Japanese economy contracted in the second quarter, down 1.6%, as consumer and businesses cut spending.
The economic slowdown suggests the BOJ may need to add further stimulus to achieve its inflation target of 2.0% by the beginning of 2016, spooking investors.
he USD/JPY advanced up to 124.56, although poor US manufacturing data triggered a downward move towards 124.15, from where the pair slowly recovered during the US session.
Technically, the 1 hour chart shows that the price stalled around its 200 SMA, currently the immediate resistance around 124.60, whilst the technical indicators aim slightly higher in neutral territory, lacking clear strength at the time being. In the 4 hours chart, the price held above a flat 100 SMA, whilst the technical indicators are also stuck around their mid-lines, giving no clues on what’s next for the pair.
Meanwhile the Australian dollar erased all of its intraday losses against the greenback, with the AUD/USD finding some intraday demand after bottoming at 0.7343 early in the American morning.
The pair is unchanged daily basis, and maintains a neutral tone, albeit compared with Friday’s one, the daily candle shows a lower high and a lower low, increasing the risk of a break lower.
The short term technical picture is neutral, as the 1 hour chart shows that the price moves back and forth around an horizontal 20 SMA, whilst the technical indicators also lack directional strength, laying flat around their mid-lines.
In the 4 hours chart, the price managed to recover above its 20 SMA in the last hours, but the indicator has lost its bullish slope, whilst the Momentum indicator heads lower, approaching the 100 level, and the RSI stands flat around 54.
Chances of a stronger decline will surge on a break below 0.7295, with scope then to retest the recent multi-years lows near the 0.7200 level.