USD/JPY analysis: at the 50% retracement of its year rally
|USD/JPY Current price: 109.59
- Japan to extend its bank holiday until next Thursday.
- Thin volumes to exacerbate yen gains in a risk-averse environment.
The USD/JPY pair fell to 109.55 and closed the year at the 50% retracement of its March/October rally, with the yen gaining on the back of prevalent fears, fueled by a tighter monetary policy in the US and speculation of a global economic slowdown. Demand for Treasuries sent yields sharply lower, with the yield on the benchmark 10-year note down to 2.68%. Japan will extend the bank holiday until next Thursday, with thin volumes during the upcoming Asian session probably exacerbating yen gains.
Technically, the pair has extended its decline below its daily 100 and 200 SMA, with this last around 111.10, painting a bearish picture for the upcoming weeks. Short-term technical readings support such view, as in the 4 hours chart, the 100 and 200 SMA maintain their bearish slopes far above the current level, as technical indicators hold near their daily lows within oversold levels. The 61.8% retracement of the yearly rally comes at 108.40, which has now become a probable bearish target.
Support levels: 109.40 109.05 108.80
Resistance levels: 109.90 110.10 110.45
View Live Chart for the USD/JPY
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