USD/JPY analysis: bearish case could gain traction below 109.75
|USD/JPY Current price: 110.02
- Risk aversion keeping the USD/JPY pair ranging within familiar levels.
- Upbeat Japanese preliminary Q1 GDP beat the market's expectations.
The USD/JPY pair edged marginally lower Monday after a failed attempt to extend its advance beyond the 110.00 figure. The dollar retained its safe-haven strength during most of the day, unable, however, to extend gains amid being extremely overbought and the absence of relevant news that could have worked as a catalyst. The pair traded as high as 110.31, as the positive sentiment was fueled by encouraging Japanese data released at the beginning of the day. Japanese preliminary Q1 GDP came in at 0.5%, better than the 0.0% expected, and the previous 0.4%. Annualized GDP soared to 2.1%, largely surpassing the expected -0.2%. Furthermore, Industrial Production fell in March by 0.6%, better than the 0.9% decline anticipated, while yearly basis it fell by 4.3%, slightly better than the -4.6% forecasted. The country has nothing scheduled for this Tuesday, while the US will only publish housing data, not enough to interrupt sentiment-related trading.
The 4 hours chart shows that the USD/JPY pair reached and retreated from the 61.8% retracement of the latest daily decline, measured between 110.95 and 109.01, now battling with the 50% retracement of the same decline. The 20 SMA maintains a bullish slope below the current level, converging with the 38.2% retracement of the mentioned slide at 109.75, while the 100 SMA offers a dynamic resistance by heading south at around 110.50. The Momentum gains downward traction within positive levels, while the RSI aims marginally higher at around 55, failing to provide clear directional clues. However, if the pair losses 109.75, the immediate Fibonacci support, the risk of a bearish extension will increase.
Support levels: 109.75 109.40 109.10
Resistance levels: 110.30 110.65 111.00
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