USD/JPY analysis: remains depressed, still near 107.00
|USD/JPY Current Price: 107.36
The Japanese yen remain trapped between two influential factors: risk appetite and lower yields. While higher prices in equity markets continue to weaken the demand for the yen, lower yields, particularly from the Treasury curve supports the demand. Today, US yields moved back lower. The 10-year approached 2.00% and still show a persistent pressure to the downside as market participants discount a rate cuts from the Federal Reserve. Data from the US on Monday came in below expectations and on Tuesday housing data is due. Presentations from FOMC members will be watched closely on Tuesday. In Japan, the central bank will release the minutes from its latest meeting. Geopolitical tensions are also worth watching. US President Trump increase sanctions on Iran. US-Iran tensions offered more support to crude oil prices.
The USD/JPY pair finished flat on Monday after a recovery found resistance at 107.50 and pulled back in line the move lower in US yields. Volatility eased after days of significant declines. Volume across financial markets will likely rise on Tuesday and if USD/JPY continues to consolidate, it could point to some stabilization of the US Dollar for a few sesssion.
From a technical perspective, the bias continues to point to the downside. The recovery was limited, and the US Dollar lacks strength for a move higher. The 4-hour chart shows the 20 SMA at 107.50, also a horizontal resistance. If the greenback rises on top it could continue the move to 107.90. On the flip side, 107.20 is protecting the 107.00 area that if broken, should clear the way for a test of 106.60. Technical indicators currently show mixed signals, with a flat RSI slightly above 30 but the trend still favors the downside.
Support levels: 107.25 106.95 106.60
Resistance levels: 107.50 107.70 107.90
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