USD/JPY analysis: fears boost the yen
|USD/JPY Current price: 109.26
- US-China trade talks cooling down amid the lack of progress on the technology transfers issue.
- Bank of Japan expected to maintain the status quo and be a non-event.
Concerns about global economic growth hit hard the financial world, resulting in the Japanese yen appreciating against all of its major rivals. The USD/JPY pair approached the 109.00 level as US equities collapsed, following a gloomy picture in the Asian session, with the negative sentiment later fueled by comments from Christine Lagarde, IMF's Chief, about the world's performance for this year, and news making the rounds about failure on trade talks between the US and China. According to people familiar with the matter, the US is unwilling two receive two Chinese vice-ministers to continue talks amid the lack of progress in the technology transfers issue. Wall Street collapsed, and so did Treasury yields, with the benchmark yield for the 10-year note down to 2.73% after ending last Friday near 2.79%. Japan will release today December trade figures, with the country's deficit expected to shrink sharply from the previous ¥-737.3B to ¥-29.5B. The Bank of Japan is having its monthly monetary policy meeting, but no surprises are expected in that front.
The short-term picture skews the risk to the downside, as in the 4 hours chart, technical indicators entered bearish ground, maintaining their strong downward slopes. The pair is still holding above a key Fibonacci support at 109.05, the 61.8% retracement of the latest daily slump, also above a bearish 100 SMA but also below a bearish 200 SMA. Below the mentioned 109.05 level, the next relevant support is 108.30, the 50% retracement of the same decline that once lost, will only fuel bears' determination.
Support levels: 109.05 108.65 108.30
Resistance levels: 109.40 109.75 110.00
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