USD/JPY analysis: corrective movement could extend once above 110.00
|USD/JPY Current price: 109.82
- Better market mood helped the pair correct up to near 110.00.
- US Treasury yields bounced after flirting with yearly lows.
The USD/JPY pair edged higher and flirted with the 110.00 figure this Thursday, although the level held, with the pair finishing the day in the 109.80 price zone. The recovery was a result of the better performance of US equities, lifted by outstanding earnings reports, and recovering government bond yields, as positive US data sent investors away from safety and further into riskier assets. The benchmark yield on the Treasury 10-year note bounced to 2.40% after falling to 2.35%, flirting with yearly lows. Japan released at the beginning of the day the April Domestic Corporate Goods Price Index, which rose 0.3% MoM and by 1.2% YoY this last, beating expectations. This Friday will start with the country publishing the April Tertiary Industry Index seen down by 0.4%, following a -0.6% decline in March.
The USD/JPY pair trades above the previous three days' highs in the 109.70 price zone, having stalled its recovery at the 50% retracement of the daily decline measured between 110.95 and 109.01. The pair seems poised to extend its upward corrective movement, as its advancing above its 20 SMA for the first time in almost a month, still far below the larger ones, which maintain their bearish slopes. The Momentum indicator bounced after nearing its mid-line, while the RSI has lost upward strength, holding however at around 55. The pair would need to clear the 110.10 level to be able to advance further, while below 109.45, the risk will turn to the downside.
Support levels: 109.45 109.10 108.80
Resistance levels: 110.10 110.50 110.85
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