USD/JPY analysis: dollar's demand offsets safe-haven
|USD/JPY Current price: 113.20
- Japanese Q3 GDP down 0.6%, current account balance surplus shrunk on trade deficit.
- US Treasury yields and equities extend their declines, banks' shares leading the way.
Despite the sell-off in Wall Street continued and government bond yields that remained depressed, the dollar surged against the safe-haven yen, with the USD/JPY pair surging past the 113.00 level, to finish the day with gains around 113.20. The pair started the day re-testing the 100 DMA in the 112.20 level, but yen's gains were capped by soft local data, as Japanese GDP shrank 0.6% in the 3-month to September, worse than the -0.5% expected, while the annualized reading printed a disappointing -2.5%. The October current account balance stood at a surplus of about ¥1.3 trillion, well below previous as the trade balance posted a deficit of ¥321.7B. The Eco Watchers November survey brought some hopes, as the assessment of the current situation improved with the index up to 51.0 from 49.3 and the outlook surging to 52.2 from 50.6. Japan will release the Q4 BSI Large Manufacturing Index and November preliminary Machine Tool Orders early Tuesday, while the US will release later in the day November PPI.
Ahead of the Asian opening, the pair offers a short-term bullish stance, as technical indicators in the 4 hours chart maintain their upwards lopes, heading higher within positive ground coming straight from oversold levels. The pair is also surpassing a dynamic resistance area, now the immediate support defined by the 100 and 200 SMA, both converging around 113.15. The pair also has several intraday highs and lows in the current 113.20 price zone, which means that the bullish case will be firmer on an advance beyond 113.30, with bears likely giving up, at least temporarily. Bears will take over the pair on a break below the mentioned 100 DMA at 112.20.
Support levels: 112.90 112.55 112.20
Resistance levels: 113.30 113.70 114.05
View Live Chart for the USD/JPY
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