USD/JPY analysis: neutral -to-bearish at the start of the week
|USD/JPY Current price: 111.47
- Poor Japanese data and broad dollar's weakness keeping the pair directionless.
- US Treasury yields fell to fresh yearly lows on mounting concerns about slowing economic growth.
The USD/JPY pair closed the week with modest gains around 111.45, despite broad dollar's weakness, as the Japanese currency had its woes to deal with. Data released these last few days fueled concerns about local economic growth, with decreasing industrial activity reported. Furthermore, the Bank of Japan had a monetary policy meeting on Friday, and while there were no fresh growth and inflation forecasts, policymakers downgraded the assessment of the Japanese economy, recognizing that the slump in exports and production was a result of slowing global growth. Meanwhile, US Treasury yields collapsed Friday, with the yield for the benchmark 10-year note falling to a fresh yearly low of 2.58%, to later close the week at 2.59%. Yields decline was attributed to the weak US and Chinese data released by the end of the week. Japan will start the week publishing February trade data, with exports foreseen down by 0.9% and import also seen declining by 5.8%.
The pair has shown little signs of life the last three weeks, consolidating near the yearly high of 112.13 since early this month. The daily chart shows that the price converges with the 100 and 200 DMA, these last directionless, reflecting the ongoing consolidative phase, while technical indicators offer different directional slopes within positive ground, falling short of confirming an upcoming directional move. Shorter term, and according to the 4 hours chart, the pair continues developing above bullish moving averages, with the 100 SMA currently around 111.30. Technical indicators in the mentioned chart turned south, maintaining their downward slopes, and with the RSI currently at 48, suggesting the pair could extend its decline toward 110.75, March 8 low.
Support levels: 111.30 111.00 110.75
Resistance levels: 111.80 112.15 112.45
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