USD/JPY backs away from highs

1 April, 2019

US Dollar Index retreats toward 97 area. Nikkei Manufacturing PMI in Japan improves slightly in March. Coming up: Retail sales and manufacturing PMI from the U.S.

The USD/JPY pair started the week with a small bullish gap and climbed higher to touch its best level in more than 10 days at 111.18 before going into a consolidation phase ahead of the macroeconomic data releases from the United States. As of writing, the pair was up 0.15% on the day at 111.

Earlier in the day, the Nikkei Manufacturing PMI in its final reading improved to 49.2 in March from 48.9 in the previous estimate. Other data from Japan revealed that the Tankan Large Manufacturing Index in the first quarter of the year slumped to 12 from 19 and fell short of the market expectation of 14.

In addition to disappointing data, the risk-on mood weighed on the JPY as well. At the moment, Germany's DAX is adding more than 1% on the day while the UK's FTSE is gaining 0.6%. Moreover, the 10-year US T-bond yield is rising by more than 1% to confirm the positive mood.

Later in the day, both the ISM and the IHS Makirt will be releasing their final Manufacturing PMI reports for the U.S. Ahead of the data, the US Dollar Index is retracing last week's rally, staying in the red a little below the 97 mark. 

The pair could find the initial support at 110.90 (daily low/20-DMA) followed by 110.55 (100-DMA) and 110 (psychological level/Mar. 28 low). On the upside, resistances are located at 111.20 (daily high), 111.50 (200-DMA) and 111.90 (Mar. 15 high).

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