USD/JPY analysis: 112.00 held but bearish case stronger
|USD/JPY Current price: 112.20
- USD/JPY recovered from a daily low of 111.94 as Wall Street trims part of its losses.
- Government bond yields down on a run to safety back yen's gains.
The Japanese yen was on demand for most of the day amid prevalent risk-averse mood, resulting in the USD/JPY pair bottoming at 111.94, its lowest for this week. The pair, however, bounced from the level alongside with US indexes, which anyway remained well into the red. US Treasury yields fell as demand for bonds surged, with the benchmark yield for the 10-year US Treasury note hitting a daily low of 3.11% from 3.19% Monday. Bank of Japan Governor Kuroda was said to have expressed concerns about "nervous" moves in global stocks, not something that can actually move the market, but a clear sign that volatility has become excessive. Japan will release its October preliminary Nikkei Manufacturing PMI, previous at 52.5, and the Leading and Coincident Indexes for August.
The pair recovered some ground in the US afternoon but still holds below the short-term ascendant channel coming from 111.62, with the trend-line that draws the base of the figure at around 112.40 for this Wednesday. In the 4 hours chart, the price is well below its 100 and 200 SMA, with the shortest gaining downward traction above the larger one, as technical indicators stabilize in negative levels, keeping the risk leaned to the downside. A break below 111.60, however, is still needed for the pair to accelerate its decline, with scope then to reach 110.37, September low.
Support levels: 112.60 112.20 111.90
Resistance levels: 113.00 113.45 113.80
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