USD/JPY analysis: bouncing from 100 DMA, but upside still limited
|USD/JPY Current price: 112.24
- Equities underpinned the pair, but bulls cautious after last week's rout.
- Japanese yen to keep depending on equities and yields.
The USD/JPY pair trimmed most of its early week losses and settled around 112.20, recovering alongside worldwide equities. Ebbing political concerns and solid earnings reports played against the safe-haven yen, also weighed by an uptick in US Treasury yields, as the benchmark for the 10-year Treasury note reached 3.18% intraday. Positive US data, however, fell short of boosting the pair, as market players remain extremely cautious after equities rout last week. The Japanese macroeconomic calendar had nothing to offer on Tuesday and will remain empty this Wednesday, leaving the pair in the hands of equities and government bond yields.
The pair neared the 100 DMA Monday, but remains above the indicator, putting a halt to a two-week decline. Not yet out of the woods, the pair is struggling around last week's close, still unable to enter bullish ground for this one. In the short term, and according to the 4 hours chart, the upside seems limited, as the pair is developing for a third consecutive day below its 200 SMA, while the 100 SMA stands some 100 pips above the current level, as technical indicators head nowhere around their midlines, leaving a neutral-to-negative stance in the short term.
Support levels: 111.90 111.50 111.20
Resistance levels: 112.30 112.60 113.00
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