USD/JPY analysis: corrective advance could extend up to 110.50
|USD/JPY Current price: 110.09
- Japanese growth is seen pat in the first quarter, down yearly basis.
- Falling equities and government bond yields, limiting the bullish potential.
After advancing for a second consecutive day, the USD/JPY pair closed the week with modest gains just above the 110.00 figure, retreating from a daily high of 110.19. US indexes closed in the red, while US Treasury yields also finished the week with losses, overshadowing, in the case of USD/JPY, broad dollar's strength, triggered by an outstanding US Consumer Confidence result. Early Friday, Japan released its April Tertiary Industry Index, which fell as expected by 0.4%, keeping alive concerns about the country's economic health. This Monday, Japan will release the preliminary estimate of Q1 GDP, anticipated to come in flat after a 0.5% increase in the previous quarter. The annualized reading is forecasted at -0.2%, well below the previous 1.9% estimate. The country will later release March Industrial Production, also seen contracting from the previous readings.
The USD/JPY pair trades above the 50% retracement of its 110.95/109.01 decline while the 61.8% retracement of the same slide stands at 110.20, this last, an immediate short-term resistance. In the daily chart, the weekly advance seems a mere correction, as technical indicators have recovered from oversold readings, having already lost bullish strength well into negative ground. In the same chart, the pair is developing below a mild bearish 100 SMA, currently at around 110.50, while the 20 SMA gains bearish strength above the longer one. In the 4 hours chart, the pair is above its 20 SMA, but the 100 SMA heads sharply lower, also in the 110.50 region, while technical indicators continue heading higher within positive levels, partially losing their bullish strength.
Support levels: 109.80 109.45 109.10
Resistance levels: 110.20 110.50 110.85
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