USD/JPY climbs higher toward 108, looks to snap 5-week losing streak
- US Dollar Index stays in range above the 96 mark after inflation data.
- Wall Street clings to small daily gains after opening in green.
- Markets wait for headlines that will come out of Trump-Xi meeting.
The USD/JPY pair edged higher in the last hour toward and is now looking to post weekly gains for the first time since mid-May. As of writing, the pair was trading at 107.85, gaining 0.06% on a daily basis.
Ahead of tomorrow's critical Trump-Xi meeting, during which sides will try to come up with a deal to end the trade conflict, major equity indexes in the U.S. started the day in the positive territory to reflect a risk-on atmosphere that makes it difficult for traditional safe-havens such as the JPY find demand.
Previewing this event, "If the leaders of the world's largest economies strike a deal – a highly unlikely scenario – stocks may roar and dollar/yen could jump higher as well," said FXStreet Analyst Yohay Elam.
USD/JPY Forecast: Correction may end amid the Trump-Xi summit, Non-Farm Payrolls
"However, a more likely scenario would be an inconclusive summit that will later lead to the US announcing new duties on China. In this adverse scenario – which has a medium probability – USD/JPY may not only retreat back to previous levels but plunge to new lows."
On the other hand, today's data from the U.S. revealed that inflation, as gauged by the core Personal Consumption Expenditures Price Index, rose 1.6% on a yearly basis in May to come in line with the market expectation. Additionally, the University of Michigan's Consumer Confidence Index in June's final reading came in at 98.2 to better analysts' estimate of 98. The US Dollar Index, which has been having a difficult time making a decisive move in either direction since mid-week, stayed in its range following these data releases and was last seen at 96.16, losing 0.06 on a daily basis.
Technical levels to consider