USD/JPY analysis: flat for the day, risk of a downward extension increased
|USD/JPY Current price: 111.36
- Japanese imports declined by more-than-expected, exports fell too in February.
- US Treasury yields consolidated at yearly lows, American indexes lacked directional strength.
The USD/JPY pair ends this first trading day of the week unchanged around 111.40, having spent the day confined to a tight 30 pips' range. Ruling optimism during the first half of the day pushed it marginally higher, up to 111.62, unable to advance further amid absent demand for the greenback. Equities traded higher in Asia, giving modest support to the pair, although US indexes were unable to follow suit, while US Treasury yields remained near 2019 lows, capping the advance in the final session of the day. Japan released its February Trade Balance, which posted a larger-than-expected surplus of ¥339.0B, although a result of plummeting imports, down by 6.7% in the month. Exports also declined, falling by 1.2%, while Industrial Production in January fell by 3.4% MoM, slightly better than the -3.7% slide expected. There are no data scheduled in Japan for this Tuesday.
Daily basis, the pair has set a lower low and a lower high, a sign of mounting downward pressure, although it still stuck to its 100 and 200 DMA, both directionless and converging in a tight 10 pips' range. The bearish case continues building up according to technical readings in the 4 hours chart, as the pair is barely holding above a bullish 100 SMA, while technical indicators entered bearish ground, the Momentum heading sharply lower and the RSI flat at around 47.
Support levels: 111.30 111.00 110.75
Resistance levels: 111.80 112.15 112.45
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