USD/JPY analysis: Bearish potential on a break below 113.00
|USD/JPY Current price: 113.54
- Repeated failure to surpass 114.40 begins to weigh on bulls' determination.
- US Treasury yields limited yen's strength, but the curve keeps flattening.
The USD/JPY pair closed the week at 113.53, down on broad dollar's weakness but off a weekly low of 113.08. The pair managed to recover ground on Friday, despite plummeting equities, as US bonds came under pressure, with yields sharply up on the day. The 10-year note yield surged to 2.40% from previous 2.33%, while the 30-year interest reached 2.88% from previous 2.81%. The 2-year note yield, reached a fresh 9-year high of 1.65%, a sign of warning as the yield-curve keeps flattening. Japan will release its inflation at factory levels at the beginning of the week, alongside with preliminary October Machine tool orders, but seems unlikely these figures could affect the pair. Technically, repeated failures to overcome the 114.40 level increase the risk of further declines ahead, although a break below the 113.00 mark is required to confirm it. The daily chart shows that the price remains far above now flat and converging 100 and 200 DMAs at 111.40, while technical indicators have lost their strength downward and turned flat around their mid-lines. In the 4 hours chart, the pair is trapped between its 100 and 200 SMAs, while technical indicators have failed to recover above their mid-lines, leaning the scale towards the downside in the short-term.
Support levels: 113.20 112.95 112.55
Resistance levels: 114.05 114.40 114.85
View Live Chart for the USD/JPY
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