USD/JPY Ends The Week On A Positive Note At 145.36
Despite losing the last 2 days (Friday & Thursday) in red, the USD/JPY pair managed to close the week in green. By the end of Friday's session, the Dollar/Yen pair price was 145.36, which is higher than the opening price of 144.91.
For the most part, the JPY got the upper hand against the USD, which highlights the strength of the Japanese Yen for the week. On the other hand, the DXY index registered some mild losses near the 103.60 level.
If we look at the fundamental side, July's CPI reading from Japan was 3.3% on a year-over-year basis. This was higher than the 2.5% forecast set by the market players and indicated a jump in inflation. The marker players were not expecting this jump and thus were taken back by surprise. That's why if we look at the FX market, it becomes clear that the JPY was deriving its strength from the CPI reading.
China's Economic Trouble Favors Greenback
However, we can't overlook the fragile Japanese economy and the fact that the recent inflation reading is not in line with the BoJ policies. Furthermore, the officials from the BOJ continue to hold a cautious stance as they try to look at the health of China's recovery. In the meantime, the BOJ is trying to refrain from making any changes to its long-termaccommodative approach.
On the other hand, the recent financial woes in China have benefited the greenback. Especially EverGrande's recent filing for bankruptcy protection has dealt a major blow to the Chinese economic recovery. So when we say that the USD has the upper hand against its rivals, it is not without substance.
Another factor that's positive for the greenback is the FOMC meeting minutes that highlight that the high-interest rate is here to stay and isn't going anywhere soon.
Now if we look at the USD/JPY daily, the bias is neutral to bearish. Basically, most of the trend indications, such as the MACD and the RSI are showing signs of fading momentum.