The Rebound to the Upside Lacks

US retail sales rose less than expected, while a core measure of household spending indicated a more resilient consumer at the end of the second quarter.

• For four consecutive trading sessions, the price of the USD/JPY currency pair has been moving in an upward retracement path, with gains that reached the 139.67 resistance level, which is stable around it at the time of writing the analysis.
• This rebound is a recovery from the sharp losses the currency pair suffered recently, as a result of which it moved towards the support level of 137.23, as investors abandoned a lot of the US dollar after the US inflation readings, which negatively affected the future of raising US interest rates.

US retail sales rose less than expected, while a core measure of household spending indicated a more resilient consumer at the end of the second quarter. Commerce Department data on Tuesday showed that the value of retail purchases rose by 0.2% in June after an upwardly revised 0.5% increase in May.

The numbers have not been adjusted for inflation. Sales in the control group — which is used to calculate gross domestic product and exclude food services, auto dealers, building materials stores, and petrol stations — accelerated to 0.6%, double the previous month’s gain.

The government’s first estimate of GDP for the second quarter will be released next week, and several economists said after the report that the sales figures indicated momentum entering the third quarter. A strong labor market and easing inflationary pressures continue to support US consumers, but higher borrowing costs and higher prices are straining household budgets. Despite the results of recent US economic data. Goldman Sachs downplayed the prospects of the US entering a recession, saying that the process of deflation can continue without the need for a more material economic slowdown.

According to the performance on the daily chart below, the price of the USD/JPY currency pair is still in attempts to rebound upwards, and the bulls’ control over the trend will strengthen if the currency pair returns to the resistance levels of 140.50 and 141.70, respectively.

Until now, I still prefer to buy the currency pair from every downward level, as the divergence will remain between the future of the Japanese central bank’s policy, which has negative interest rates exclusively between global central banks, and the US Federal Reserve, which leads a violent tightening campaign to confront record inflation.

Currently, the closest levels of support for the USD/JPY are 138.45 and 137.00, respectively. Today, the currency pair will be affected by the announcement of the US housing market numbers and whether or not investors are willing to take risks.

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