USD/JPY analysis: bullish strength builds up, but not yet confirmed
|USD/JPY Current price: 107.63
- Japan preliminary Nikkei Manufacturing index for April expected at 52.6 from the previous 53.1.
- Rally in US Treasury yields overshadowed by plummeting equities.
The USD/JPY pair closed the week with modest gains at 107.63. Despite the rally in US Treasury yields, with the 10-year note benchmark reaching 2.96%, its highest since January 2014, and the 2-year note yield hit 2.46%, its highest since September 2008, the upside remained well limited for the pair. Partially limiting the rally in USD/JPY were equities, which lost their early impulse and plunged by the end of the week, practically trimming their gains for the period. Still, seems not enough of a reason for keeping the pair below the 108.00 level. It's quite reasonable to think that concerns about a trade war, tensions in the Middle-East and overall the US foreign policy, remain as a major cap despite being now left aside. Japan will release its preliminary Nikkei Manufacturing index for April, expected at 52.6 from the previous 53.1, and the All Industry Activity Index, seen bouncing in February to 0.1% after falling 1.8% in January.
The daily chart for the pair shows that it posted its highest settlement since mid-February and that it remains above a daily ascendant trend line coming from early April low. However, the 100 DMA maintains a sharp bearish slope above the current level, offering a dynamic resistance around 108.30. The Momentum indicator in the mentioned chart heads nowhere above within positive territory, but the RSI maintains a bullish slope around 59, supporting additional gains ahead. Shorter term, and according to the 4 hours chart, the pair presents a neutral-to-bullish stance, holding above moving averages that lack directional strength, as technical indicators hover inside positive territory, but also without clear directional strength.
Support levels: 107.45 107.10 106.80
Resistance levels: 107.85 108.30 108.60
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