FxWirePro: USD/JPY rangebound above cloud support, escalating US-China geopolitical tensions support dollar

Chart - Courtesy Trading View 

USD/JPY was trading 0.22% lower on the day at 132.85 at around 05:05 GMT. US dollar consolidates previous session's gains, bounces off cloud base support.

Escalating geopolitical tensions between the US and China over Taiwan keep dollar demand intact and downside limited.

Mixed signals from the US Federal Reserve (Fed) policymakers keep investors wary. According to Reuters report:

St. Louis Federal Reserve President James Bullard rejected US recession fears while favoring the 50 basis points (bps) rate hike. 

San Francisco Fed President Mary Daly said that she is looking for incoming data to decide if they can downshift the rate hikes or continues at the current pace.

Chicago Fed President Charles Evans showed support for a 50 basis points (bps) rate hike for the September policy meeting if inflation does not improve.

Cleveland Fed President Loretta Mester, on the other hand, said she does not think the country is suffering a recession, adding that the labor market is in great shape.

Focus now on the US Institute of Supply Management (ISM) Services PMI data which is expected at 53.5, significantly lower than the prior release of 55.3.

Technical Analysis:

- USD/JPY finds support at cloud base, weakness only on break below

- Stochs and RSI are on verge of rollover from oversold levels, RSI still below 50 mark

- GMMA indicator shows near term trend has turned bullish on the intraday  charts

- RSI divergence on the daily charts keeps downside pressure

Major Support Levels: 131.47 (Cloud base), 129.68 (110-EMA)

Major Resistance Levels: 133.66 (55-EMA), 135.24 (21-EMA)

Summary: USD/JPY trades with a neutral bias above daily cloud, weakness only on break below.