USD/JPY analysis: under pressure and headed toward 106.77
|USD/JPY Current price: 107.91
- The Japanese macroeconomic calendar had nothing to offer this Tuesday.
- US Treasury yields eased modestly, held near three-week highs.
- USD/JPY bearish case to remain strong as long as it holds below 108.00/10.
The USD/JPY pair has spent the day confined to the lower end of Friday’s range, unable to recover the 108.00 level and settling near a daily low of 107.79. The quietness around the pair had to do with a holiday in Japan and therefore, the absence of macroeconomic news from the country. However, Chinese data was out during the first session of the day, lifting concerns about a global economic downturn, as the country’s Q2 GDP came in as expected at 6.2%, the lowest reading in almost three decades. Equities lost momentum, although Asian and European equities closed with modest gains, and Wall Street managed to touch fresh all-time highs before turning south. Japanese markets will return to normal this Tuesday, although the macroeconomic calendar will remain empty. Meanwhile, US government bond yields hovered around Friday’s closing levels, ending Monday with modest losses.
USD/JPY short-term technical outlook
The USD/JPY pair topped for the day at 108.10, briefly surpassing a mild-bearish 20 DMA before returning sub-108.00, maintaining the risk skewed to the downside. Shorter term, and according to the 4 hours chart, the pair is at risk of extending its decline, as the pair remains below all of its moving averages, with the 100 SMA offering an immediate resistance around 108.00 and the 20 SMA crossing below the 200 SMA, in the 108.20 price zone. The Momentum indicator retreated sharply after testing its mid-line, while the RSI indicator keeps grinding lower at around 39. July’s monthly low comes at 107.52, with a break below the level favoring a test of 106.77, the multi-month low established late June.
Support levels: 107.50 107.10 106.75
Resistance levels: 108.00 108.35 108.70
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