USD/JPY pares gains, clings to 124 handle

FXStreet (Mumbai) - The US dollar trimmed early gains versus its Japanese counterpart in mid-Asia, keeping USD/JPY sidelined near 124 barrier, as the greenback tires to recover from Friday’s labour data-blow while weak Japanese manufacturing gauge also aids the recovery in the major.

USD/JPY bounces-off lows

Currently, the USD/JPY pair trades 0.12% higher 124, having posted fresh session lows at 123.93 in last hours. USD/JPY eased-off highs reached at 124.12 in early moves and hovers around 124 handle as the US dollar appears to pose a tepid recovery against the yen in Asia following Friday’s poor Employment Cost Index (ECI) induced heavy losses.

The ECI index showed a poor increase in US wages during the second quarter, posting only a 0.2% hike, while the first quarter saw a 0.7% jump. Moreover, the ECI rose 2.1% over the year ending June, while wages and benefits posted only a 1.8% hike and private services only a 0.1% increase.

Moreover, yen took a hit earlier today after Japanese manufacturing PMI came out below estimates. Japan Final Manufacturing Purchasing Manager Index down to 51.2 in July from previous 51.4.

We have a crucial week ahead in terms of key US economic releases while BOJ’s monetary policy statement will also remain in focus. Later in the day ahead, traders now turn their attention towards US Core PCE index and ISM manufacturing PMI for further momentum on the pair.

USD/JPY Technical Levels

To the upside, the next resistance is located 124.50 (July 21 High) levels and above which it could extend gains 124.75 (June 9 High) levels. To the downside immediate support might be located at 123.73 (July 21 Low) below that at 123.50 (July 31 Low) levels.