It has been a relatively quiet week for USD/JPY, which remains below the 106 line. Currently, the pair is trading at 105.46, down 0.13% on the day. The focus on Thursday will be on Japanese consumer data, with the release Average Cash Earnings and Household Spending.
Investors braced for soft Japanese consumer data
Japanese consumers are holding tight on the purse strings, as the economic picture remains gloomy. Household Spending hasn’t managed to record a gain since September 2019 and plunged 16.2% in May. Another drop is expected, with a forecast of -7.8%. Average Cash Earnings, which measures employment income, fell by 2.1% in May, marking a second straight decline. Analysts are projecting a third successive decline, with an estimate of -3.0%.
Bank of Japan Governor Haruhiko Kuroda didn’t provide any encouraging words in a speech on Wednesday. Kuroda warned that the economic conditions could worsen if the government imposes severe health measures in order to contain Covid-19. Kuroda added that if the economic downturn continues due to the pandemic, the country’s financial system could be at risk. Japan is in the midst of a recession, with GDP posting declines in three consecutive quarters.
USD/JPY Technical
USD/JPY was up slightly in the Asian session but gave up these gains in European trade.
- 105.87 is the next resistance line. Above, we find resistance at 106.14
- 105.32 is under pressure in support. 105.04 is the next support level
- USD/JPY continues to put pressure on the 10-day MA. If the pair breaks below this line, it would be a bearish signal for the pair
