During the North American trading session on Friday, the USD/JPY pair made a partial recovery from its previous losses and climbed back up to around 145.50, although still showing a 0.1% decrease. This increase can be attributed to the US Dollar’s rebound and flattening, while investors eagerly await the publication of preliminary data on Michigan consumer sentiment and inflation expectations for the month of May at 14:00 GMT.
The US Dollar Index (DXY), which measures the strength of the USD against six major currencies, has stabilized around 100.80.
Investors will closely monitor the US Consumer Sentiment Index, which dropped to 52.2 in April due to the ongoing trade tensions with China, marking the lowest level since July 2022.
Meanwhile, the Japanese Yen (JPY) has been performing better than other currencies, despite the weak GDP data for the first quarter of the year. The Japanese economy experienced a 0.2% contraction during the January-March period, a larger decline than the expected 0.1% decrease. In the previous quarter, the economy had grown at a robust pace of 0.6%.
The USD/JPY pair has retraced significantly from its recent six-week high of 148.54, reaching near 145.00 on Friday. The 20-day Exponential Moving Average (EMA) near 145.20 has been providing support for the pair.
The 14-day Relative Strength Index (RSI) is struggling to break above the 60.00 level. A new bullish momentum could be triggered if the RSI manages to break through this level.
An upward movement towards the psychological level of 150.00 and the March 28 high of 151.21 could occur if the pair breaks above the May 13 high of 148.57.
On the other hand, if the pair falls below the May 7 low of 142.42, it could see further declines towards the April 22 low of 139.90 and the July 14, 2023 low of 137.25.