USD/JPY: Technical indicators offset pandemic, rangebound action

US consumer economy showed strength in May but June is still a question while Japanese statistics offer limited scope for quick for recovery. Nonetheless, Joseph Trevisani, an analyst at FXStreet, expects the pair to be driven by technical aspects as USD/JPY trades in the 106.50-107.50 range.

Key quotes

“It appears the viral disposition is considerably different this time, at least in the United States. Cases are rising steeply in some places, and part of the gain is due to increased testing, but there has not been a concomitant rise in fatalities. Some urban areas are reporting increases in virus hospitalizations but all areas seem to be far better prepared than in March and April.”   

“Economic statistics are still a secondary consideration for markets attendant on pandemic developments but for the USD/JPY the rebounding American data will form a base for the pair. The consumer-driven US economy appears able to recover faster than the export-led Japanese model, and that will eventually lend support to the USD/JPY.”

“Unless there is a dramatic development in the pandemic the technical aspects of the USD/JPY will order trading in the week ahead as they have since the second week of June. The unusually symmetrical outside range is 106.00 to 108.00 with closer boundaries at 106.50 and 107.50.”