The dollar-yen remains in range bound trade heading into key economic data at the end of the week. The US retail sales and unemployment claims will set the stage for directional dollar trade, while the Bank of Japan (BoJ) monetary statement will help define the central bank’s outlook on further easing going forward.
According to Kazuo Shirai, a trader at Union Bank, “the dollar overall is bid,” referring to underlying dollar demand. However, there is a caveat for Shirai, “unless there’s a big surprise from the retail sales data, we’ll likely see dollar-yen remain n range ahead of the Fed meeting,” which will be held on June 17. Analysts still forecast second-half growth this year, and this optimism is given the dollar some demand.
The dollar-yen is consolidating into the apex of a triangle pattern on the 4H chart. Supporting indicators are pointing to a potential move to the downside. The RSI has been sloping down through 50, while the +/- DMI is on the verge of a bearish convergence. Price action is testing support at 102.36, while secondary support 102.25 remains the intraday target before testing the ascending trend line. A break through the near-term ascending trend line would cause price action to test 102.
Resistance to the upside remains at 102.45 and 102.60, which would test the descending resistance trend line. 102.80 can be achieved on a close above the trend line resistance.