USD/JPY Bulls Eye 145 Resistance on the Fourth of July Holiday

Highlights

• The USD/JPY was down 0.02% to 144.623 this morning.
• There are no economic indicators from China or Japan to move the dial this morning.
• With the US markets closed for the Fourth of July holiday, it should be a non-eventful day for the USD/JPY.

It is a quiet Tuesday session for the USD/JPY. There are no economic indicators from China or Japan to draw interest this morning. The lack of economic indicators will leave investors to reflect on the overnight US manufacturing PMI numbers ahead of the all-important US services PMIs and the US Jobs Report.

Softer US inflation numbers from Friday and the overnight US ISM Manufacturing PMI numbers could signal a shift in sentiment toward the Fed. However, the US Jobs Report would need to disappoint to ease bets on a September move.

In contrast, the latest economic indicators from Japan support the Bank of Japan’s ultra-loose stance, leaving policy divergence in favor of the greenback.

The US Session

It is a quiet day ahead on the US economic calendar. The US markets are closed for the Fourth of July holiday.

With no US economic indicators to consider, investors should track Fed chatter later in the day. The markets expect a July interest rate hike despite the gloomy US manufacturing PMI numbers. A slump in service sector activity and a disappointing US Jobs Report could change the narrative.

Dovish Fed chatter would catch the dollar bulls by surprise. While inflation was softer, the Core PCE Price Index remained elevated.

USD/JPY Price Action

Daily Chart

The Daily Chart showed a sustained USD/JPY breakout from the psychological 144 support level despite the markets responding to the US manufacturing PMI numbers. The USD/JPY remained above the 200-day (136.059) and 50-day (139.865) EMAs, signaling bullish momentum over the near and long term.

Notably, the 50-day EMA continued to pull away from the 200-day EMA and reflected bullish momentum affirmed by the Monday recovery.

Looking at the 14-Daily RSI, the 72.54 reading signals overbought territory, suggesting a return to sub-144. However, a hold above the lower level of the 144.3 – 145.0 resistance range should support a run at 145.

4-Hourly Chart

Looking at the 4-Hourly Chart, the USD/JPY faces stern resistance at the 145 psychological level. The USD/JPY remained above the 200-day (140.852) and 50-day (143.738) EMAs. Significantly, the 50-day EMA pulled further away from the 200-day EMA, signaling another test of the upper level of the resistance range of 144.3 – 145.0.

The 14-4H RSI reading of 57.84 indicates a moderately bullish stance, with buying pressure outweighing selling pressure. Significantly, the RSI aligns with the EMAs, signaling another run at 145.