USD/JPY analysis: bounce stalled below the weekly opening
|USD/JPY Current price: 109.66
- US Treasury yields bounced modestly, helping USD/JPY to rebound.
- Equities changed course Tuesday, with Wall Street recovering a good part of its Monday's losses.
The USD/JPY pair was able to correct higher Tuesday, although the recovery stalled around the current 109.60/70 price zone, still down for the week. The better performance of European indexes, later replicated by Wall Street, underpinned the pair, alongside bouncing US government bond yields, as the benchmark yield for the 10-year note recovered up to 2.42%, following comments from US President Trump, who said that a deal with China, if it happens, will be announced within the next month. Japanese data released at the beginning of the day was mixed, as the March Trade Balance printed a surplus of ¥700.1B, more than doubling the market's expectations, although the April Eco Watchers Survey on the current situation improved by less-than-anticipated, printing 45.3 vs. the expected 46.7 and the previous 44.8. The survey on the outlook was also softer-than-expected, coming in at 48.4. Early Wednesday, the country will release April Construction Orders, Housing starts, and preliminary Machine Tool Orders.
The USD/JPY pair has quite a limited upward potential according to readings in the 4 hours chart, as it's being unable to advance beyond a still bearish 20 SMA, having spent most of the day struggling around it. The 100 SMA keeps heading south below the 200 SMA, both far above the current level, while technical indicators spent the day consolidating below their midlines, lacking directional strength. The movement seems corrective as it will take a steady recovery above the 110.10 price zone to shrug off the bearish stance.
Support levels: 109.45 109.10 108.80
Resistance levels: 109.90 110.10 110.50
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