USD/JPY: Range trading ahead Powell's speech, bulls need to take 106.70

The USD/JPY pair is trading just above the 106.00 level, as speculative interest is in wait-and-see mode ahead of Fed Powell’s speech. The US will also present the second estimate of Q2 GDP and weekly unemployment claims, FXStreet’s Chief Analyst Valeria Bednarik briefs.

Key quotes

“Chairman Powell is expected to unveil the latest review of the Fed’s monetary policy framework and set the stage for a new one, based around average inflation targeting (AIT). Policymakers are likely to adopt a new approach which balances periods of low inflation with other of higher price pressure. In this scenario, it seems the central bank will keep rates at record lows for long.”

“The US will have a busy macroeconomic calendar, as it will publish the second estimate of Q2 GDP, foreseen at -32.5% from -32.9%, and Initial Jobless Claims for the week ended August 21, seen at 1 million.”

“The USD/JPY pair is struggling with a congestion of moving averages, which remain directionless. Technical indicators, in the meantime, have bounced from around their midlines, heading modestly higher with limited strength.” 

“The pair would need to advance beyond 106.70 to turn actually bullish, and defy the monthly high at 107.04.”