Last Thursday, initial U.S. jobless claims for the week ended July 14 topped the expected 245,000 with 228,000 claims, while continuing claims for the prior period topped 1.729 million with 1.754 million claims.

Last week’s trading was generally bullish in terms of stock market performance USD/JPY of the currency pair with bullish retracement gains that reached the 141.95 resistance level, and Friday’s trading session was the most prominent on the upward retracement path. It is settling around 141.45 at the time of writing. The currency pair may remain on the current bullish trajectory until markets react to the announcement of monetary policy decisions by both the US Federal Reserve and the Bank of Japan this week. Expectations still favor the strength of the US dollar as the Bank of Japan is still the owner of a negative interest rate and is the only one of the rest of the global central banks to take a tough stance on further rate hikes to contain historically high inflation.

According to fundamental analysis, trading on the USD/JPY currency pair is influenced by the results of recent economic data, as Japan’s national consumer price index for June missed the expected change (yearly) by 3.5% with a change of 3.3%. On the other hand, the CPI for food and energy and the CPI for fresh food corresponded to the expected changes (year-on-year) to 4.2% and 3.3%. Earlier in the same week, Japan’s imports and exports for June beat expectations at -11.3% and 2.2%, respectively, with changes of -12.9% and 1.5%.

In the US, retail sales for June missed the expected change (MoM) by 0.5% with a change of -0.2%. Retail auto sales fell 0.3%, a change of 0.2%, while the Retail Sales Watch beat expectations for a change of -0.3%, a change of 0.6%. Last Thursday, initial U.S. jobless claims for the week ended July 14 topped the expected 245,000 with 228,000 claims, while continuing claims for the prior period topped 1.729 million with 1.754 million claims.

• The price of the USD/JPY currency pair has now advanced and is trading several levels above the 100-hour moving average. Last Friday’s rally pushed the currency pair to overbought levels on the 14-hour RSI.
• In the near term and based on the performance on the hourly chart, the USD/JPY currency pair appears to be trading within a bullish channel formation.
• This indicates a significant short-term horizon bullish bias in market sentiment. Therefore, bulls will target extended gains around 142.40 or higher at 142.98 resistance. On the downside, bears will target a short-term pullback around 141.24 or lower at 140.62 support.

In the long term and from the performance on the daily chart, it looks like USD/JPY will return to form an ascending channel after the recent bounce. This suggests that the bulls are trying to gain control over the pair in the long term. Therefore, bulls will focus on extended bounces around 144.83 or above 148.25 resistance. On the other hand, bears will target long-term gains around the 138.33 support or below the 134.71 support.

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