USD/JPY Analysis: Consolidating at October highs, bullish
|USD/JPY Current Price: 108.66
- The Bank of Japan will have a monetary policy meeting this week.
- US equities and government yields closed Friday with gains, keeping the pair afloat.
- USD/JPY has chances to extend its advance to 109.31, August monthly high.
The USD/JPY pair has finished the week with modest gains at 108.66, having been unable to reach a fresh October high. The pair has spent these last few days ranging amid persistent Brexit uncertainty keeping demand for safe-haven assets underpinned. The yen lost some ground on Wednesday, following headlines related to the BOJ’s future monetary policy. According to those, policymakers are considering lowering their forecast for economic growth and inflation this year. The central bank is scheduled to meet this week, and no particular announcement is expected this time, although there’s mounting speculation that Kuroda & Co. will pave the way for additional stimulus.
Helping the pair to advance, US Treasury yields edged higher on Friday, with the benchmark yield on the 10-year note closing the week at 1.80%. Wall Street also posted a substantial advance at the end of the week. At the start of the week, Japan will publish the September Corporate Service Price Index, seen at 0.5% from the previous 0.6%.
USD/JPY short-term technical outlook
The USD/JPY pair has continued to consolidate at the upper end of its October range, meeting buyers on pullbacks to the 23.6% retracement of such rally. In the daily chart, it remains above its 20 and 100 DMA, but below a directionless 200 DMA, which stands a few pips above 109.00. The Momentum indicator eases from overbought levels, while the RSI consolidates around 60, lacking clear directional strength but, given that they stand well into positive ground, leaning the risk to the upside. In the shorter term, and according to the 4-hour chart, the pair is neutral-to-bullish as it holds above a directionless 20 SMA, but with technical indicators still stuck to their midlines.
Support levels: 108.25 108.00 107.75
Resistance levels: 108.70 109.00 109.35
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