USD/JPY analysis: increasing risk of a downward move
|USD/JPY Current price: 109.97
- Japanese National inflation far below BOJ's 2.0% target.
- Sour tone of US Treasury yields added to yen gains these days.
The USD/JPY pair settled at 109.97, down for the week despite adding some pips on Friday, benefiting at the beginning of it from risk aversion triggered by trade war concerns, and later by broad dollar's weakness. Lingering worries over global trade weighed also on US Treasury yields, with the yield on the benchmark 10-year Treasury note ending the week at 2.89%, adding to the bearish case of the pair. Japanese National inflation released Friday was up 0.7% YoY, while core CPI came in also at 0.7%, far below the BOJ's 2.0% target, signaling that the ultra-loose monetary policy will continue for the foreseeable future. The country will release the final versions of April's Leading and Coincident Indexes, expected to suffer downward revisions. The pair spent much of the last two trading days below the 61.8% retracement of the May's decline, but above the 50% retracement of the same rally, bottoming in the week some pips below this last at 109.54. In the daily chart, the 200 SMA converges with the mentioned 50% retracement, the RSI indicator holds flat around 50 while the Momentum is crossing its mid-line into negative territory, all of which leans the risk toward the downside without confirming it. In the 4 hours chart, the pair presents a neutral-to-bearish stance, as the price is struggling with parallel 100 and 200 SMA, while technical indicators lack directional strength right below their midlines.
Support levels: 109.55 109.20 108.80
Resistance levels: 110.15 110.45 110.90
View Live Chart for the USD/JPY
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