USD/JPY analysis: downside limited as long as above 112.14
|USD/JPY Current price: 112.26
- US Treasury yields soar, 2-year note yield reaches highest since 2008.
- Japan PM Abe to face a leadership contest, largely expected to be re-elected.
The USD/JPY pair eased from a fresh multi-week high of 112.44 on the back risk aversion spurred by Brexit headlines, ignoring soaring yields and equities' rally, as the market is unwilling to buy the greenback. US Treasury yields barely retreated at the end of the day, with the benchmark for the 10-year note hitting 3.09% its highest since last May, to settle around 3.06%, the yield on the 2-year note hit its higher since 2008, at 3.22%, reviving concerns about a possible yield-curve inversion. Japan's PM Abe will face a leadership contest during the upcoming Asian session, widely expected to be re-elected as the leader of the LDP for a third consecutive mandate. The event should not have any effect on yen's crosses. There are no other events scheduled in Japan.
The pair holds at the upper end of its weekly range, losing some upward potential according to technical readings in the 4 hours chart but far from bearish, as technical indicators are retreating from their daily highs but well above their midlines, as moving averages remain well below the current level and with the 100 SMA gaining upward strength above the larger one. The positive sentiment could fade on a break below 112.15, August high and the immediate support, while the upward potential will likely increase on an advance beyond 112.60, the immediate short-term resistance.
Support levels: 112.15 111.80 111.45
Resistance levels: 112.60 112.90 113.20
View Live Chart for the USD/JPY
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