USD/JPY analysis: back to neutral on opposing hints
|USD/JPY Current price: 110.56
- BOJ's Kuroda sent the JPY lower with a pledge to add stimulus if needed.
- US Treasury yields edged lower offsetting yen's weakness.
The USD/JPY pair advanced up to 110.82, its highest for this week, but gave up intraday gains an returned to its comfort zone around 110.50 as the market dumped the greenback. The Yen weakened at the beginning of the day after BOJ's Governor Kuroda said that he would consider adding more stimulus to achieve the inflation target if needed, or if the currency's moves impact the economy. Yen's weakness was offset by the poor performance of Asian and European equities, and weaker US government bond yields. Wall Street managed to post modest gains, also limiting the pair's decline in the last trading session of the day. In the data front, Japan is scheduled to release January trade data, with the merchandise trade deficit expected to widen sharply to ¥-1,011.0B vs. the previous ¥-56.7B.
The 4 hours chart shows that technical indicators returned to neutral levels, erasing the positive strength seen at the beginning of the say, with the Momentum now heading south with a nice bearish slope, increasing the odds of a bearish extension. In the same chart, the 100 SMA maintains a modest bullish slope, acting as dynamic support at around 109.95, providing a relevant intraday support that if it's broken, could result in a steady decline over the following sessions. The yearly high stands at 111.12, the level to break to trigger a bullish run.
Support levels: 110.45 110.10 109.75
Resistance levels: 110.80 111.15 111.45
View Live Chart for the USD/JPY
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