USD/JPY analysis: bearish correction can extend on risk aversion
|USD/JPY Current price: 112.21
The Japanese yen strengthened against all of its major rivals, resulting in the USD/JPY pair falling down to 111.35 intraday, before recovering some ground to settle around 112.20. Yields on government debt fell across the board, with the US 10-year yield down 5bp at the end of the day, to 2.32%. Adding to yen's strength were falling equities, with most major indexes closing in the red, amid increasing risk aversion, triggered by OPEC's failure to reach a deal and increasing political woes in Europe. Japan is scheduled to release its latest unemployment and retail sales figures during the upcoming Asian session, although the pair will likely keep on trading on sentiment this Tuesday. Technically, the risk is towards the downside intraday, given that in the 1 hour chart, the price is back below its 100 SMA after a short-lived recovery above it, while technical indicators turned sharply lower within positive territory, and are currently crossing their mid-lines towards the downside, supporting some additional declines towards 111.20, the 200 SMA. In the 4 hours chart, technical indicators maintain their sharp bearish slopes within negative territory, while the 100 and 200 SMAs maintain their bullish slopes far below the current level, indicating that in the longer run, the risk remains towards the upside.
Support levels: 112.70 112.30 111.90
Resistance levels: 113.55 114.05 114.40
View Live Chart for the USD/JPY
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