USD/JPY flirting with daily lows post-US data, focus shifts to Powell’s speech

   •  US durable goods orders for July fall short of consensus estimates.
   •  USD weakens farther in reaction to the disappointing macro data.
   •  Focus remains on Powell’s speech at Jackson Hole Symposium.

The USD/JPY pair extended its retracement slide from an intraday high level of 111.49, or near three-week highs, and refreshed session lows in the last hour. 

The PBoC's decision to re-introduce the counter-cyclical factor in its Yuan fixing mechanism triggered some fresh USD weakness during the mid-European session. The already weaker US Dollar lost some additional ground after the latest monthly US durable goods orders data declined more than expected by 1.7% m/m in July as compared to a decline of 0.5% expected. 

Excluding transportation items, core durable goods orders also fell short of market expectations and posted a modest growth of 0.2% in July as against 0.5% anticipated. Adding to the disappointment, previous month's readings were also revised lower to show a monthly growth of 0.7% and 0.1% respectively and further added to the greenback woes. 

Further downside, however, remained cushioned as investors seemed reluctant to place any aggressive bets ahead of the Fed Chair Jerome Powell's highly anticipated speech at the annual Economic Policy Symposium, in Jackson Hole.

Technical outlook

Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The 4 hours chart shows that the pair is struggling with a flat 200 SMA, while the 100 SMA still heads south below the largest. Technical indicators in the mentioned chart have reached overbought territory, with the RSI consolidating at 69 and the Momentum losing upward strength but holding near highs. Overall, the risk is leaned to the upside, although the current region is a tough resistance. Once and if cleared, the pair has room to extend up to the 111.90/112.20 price zone.”