USD/JPY analysis: risk sentiment skews the risk to the downside
|USD/JPY Current price: 113.17
- A holiday in the US helped the pair to bounce, still at risk of resuming its decline.
- Asian and European equities closed in the red, anticipating a sour mood ahead.
The USD/JPY pair gained upward traction in thin US trading, settling near a daily high of 113.22. It trimmed half of Tuesday's losses, when it fell down to 112.57 amid collapsing Wall Street. This Wednesday, equities did no better, yet tensions in Europe and easing commodity-linked currencies gave some support to the greenback. There was no activity in US indexes or yields to lead the way although the negative close of European indexes at fresh weekly lows, leans the risk to the downside for the upcoming sessions. Japan released the Nikkei Services PMI for November, which came at 52.3, below the previous 52.4, doing little for the yen. The country has nothing relevant to offer this Thursday.
Despite the daily advance the short-term picture for the pair keeps the risk skewed to the downside, as, in the 4 hours chart, the Momentum indicator softens in negative level, while the RSI advanced just marginally, still holding below its mid-line. In the same chart, the price is struggling with directionless moving averages, with the shrinking range between them indicating the absence of a clear trend. The bearish potential will increase on a break below the 112.50/60 region, with further declines expected once below 112.20, the 100 DMA.
Support levels: 112.55 112.30 112.00
Resistance levels: 113.35 113.60 113.85
View Live Chart for the USD/JPY
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