USD/JPY analysis: modest bounce from key 111.60 region, but still bearish
|USD/JPY Current price: 111.85
The USD/JPY pair fell below the 112.00 level for the first time since early February, trading as low as 111.68 before bouncing some 20 pips. The pair has spent most of the first half of the day consolidating within its Monday's range, but broke south after Wall Street's opening, as stocks plunged to fresh 4-week lows, whilst Treasury yields followed suit. US government bonds surged as the dollar came under pressure, leading to a sharp retracement in yields. The 10-year note yield sunk to 2.42% from previous 2.47%, while the 30-year benchmark is down to 3.04% from 3.09% previously. Japan will release its February trade balance figures and the Minutes of the latest BOJ's meeting during the upcoming Asian session, which may lead to further gains in the yen. From a technical point of view, the bearish potential remains strong, albeit the pair has a major support around 111.65, from where it bounced several times during the past two months. Nevertheless, and in the 4 hours chart, the price is well below its 100 and 200 SMAs that anyway remain flat, while technical indicators remain within negative territory, with the RSI now consolidating around 28, somehow reflecting easing selling interest. At the same time, the pair is unable to recover above 112.00, the 38.2% retracement of late 2016 rally, now the immediate resistance.
Support levels: 111.65 111.20 110.70
Resistance levels: 112.00 112.50 112.90
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