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FxWirePro: USD/JPY retraces some of the previous session's losses, Michigan CSI eyed for impetus

Chart - Courtesy Trading View 

USD/JPY was trading 0.22% higher on the day at 133.16 at around 04:00 GMT, after closing 1.62% lower in the previous session.

Inflation data miss overnight has trimmed the odds of extremely hawkish guidance by the Federal Reserve (Fed). However, the odds of a rate hike are still intact.

Interest rate futures pared bets on a third straight 75-basis-point hike at its Sept. 20-21 policy meeting, and now see a half-point increase as the more likely option.

Going forward, major focus will be on the US Michigan Consumer Sentiment Index (CSI) data, which is due on Friday. 

The sentiment data is expected to show a consecutive improvement to 52.2 from its prior release of 51.5, after slipping to 50 for the first time in the past 20 years.

Headlines surrounding China which suggest US President Biden will rethink steps on China tariffs in wake of Taiwan response keep recovery limited.

Later in the day, weekly readings of the US Jobless Claims and the monthly Producer Price Index (PPI) for July will be eyed for fresh impulse.

Major Support Levels: 

S1: 131.68 (Cloud base)

S2: 131.10 (Lower BB)

Major Resistance Levels: 

R1: 133.58 (200H MA)

R2: 133.73 (55-EMA)

Summary: USD/JPY keeps scope for more weakness. Watch out for break below cloud for further downside. 

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