USD/JPY Analysis: bouncing from fresh two-week lows, bearish
|USD/JPY Current price: 107.88
- Japanese trade surplus larger-than-anticipated in June amid a sharp decline in imports.
- Risk-off dominates the financial world amid renewed trade war concerns.
- USD/JPY to resume its decline on a break below 107.52, this month low.
The American dollar remained under pressure at the beginning of the day, with the Japanese Yen making the most out of it, as risk-averse sentiment led the way. The USD/JPY pair fell to 107.61 amid renewed trade fears boosting demand for safe-haven assets. US government debt yields fell sharply, with the benchmark yield on the 10-year note currently at 2.05%, trimming last week’s gains. Equities are a sea of red worldwide, following big names missing earnings forecast, adding fuel to the fire.
Japan released overnight June trade data. The Merchandise Trade Balance Total printed a larger-than-expected surplus of ¥589.5B, as a result of an unexpected drop in imports, down by 5.2% when compared to a year earlier. Exports also declined by more-than-anticipated, falling by 6.7% in the same period. The US will publish today weekly unemployment data for the week ended July 12, and the Philadelphia Fed Manufacturing Survey for July, seen at 5.0 vs. the previous 0.3. Later in the day, Fed’s Bostic and Fed’s Williams will speak in separated events.
USD/JPY short-term technical outlook
The USD/JPY pair has bounced from the mentioned low, but remains in the red for the day, anyway bearish according to short-term technical readings. In the 4 hours chart, the 20 SMA extends its decline below the larger ones, all of them above the current level. The Momentum indicator has recovered modestly but remains below its 100 line, while the RSI bounced from near oversold levels, but remains well into negative territory. July’s low at 107.52 is now the immediate support with a break below the level opening doors for a test of 106.77, June’s low.
Support levels: 107.50 107.10 106.75
Resistance levels: 108.00 108.40 108.80
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