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USDJPY Snaps Winning Streak Below BoJ Intervention Level

USDJPY snapped its seven-day winning streak on Monday, going down by 0.15 percent to trade at 159.57. The pair reached an intraday high of 159.92 in the New York session, avoiding the psychological 160.0 barrier and delaying retesting its April historic highs. Last week’s gains saw the US dollar gain 1.5 percent on the Japanese yen, the highest weekly gain since the first week of May. The BoJ intervened the last time the USDJPY hit the 160.0 territory, and the buyers will likely expect the central bank to hold its horses before entering the market.

The Japanese yen received some support from the rise in Japan’s National CPI, which came in at 2.5 percent in May, up from April’s 2.2 percent. However, that was marginally below the forecast figure of 2.6 percent. Japan has been battling deflation, and it is one of the reasons why the economy has struggled in recent times. Looking ahead, investors will be looking at the June BoJ Core Consumer Price Index to provide a fresh perspective into Japan’s inflation trajectory.

There will be no high-impact data from the US economy on Tuesday, save for the June CB Consumer Confidence reading.  However, it is highly likely that many traders will ignore the data and instead align themselves in the Japan CPI release. That said, the greatest release of the week will be the Pursonal Consumption Expenditure (PCE) data and Fed Monetary Policy report, both of which will be out on Thursday.

Technical analysis

The momentum on USDJPY points to control by the sellers. We are likely to see a continuation of the downside if resistance persists at 159.48, with the first support likely to be at 159.31. A breach of that mark could strengthen the sellers to extend lower to test 158.09. Alternatively, a move above 159.48 could strengthen the buyers to take control and move to the first resistance at 159.73. Extended control could break the resistance, at which point the downside narrative could be invalid. Furthermore, such an action will likely push the pair further up to test 159.95.