USD/JPY Analysis: unstoppable yen’s advance far from over
|USD/JPY Current Price: 105.31
- Dismal Japanese data may exacerbate yen’s strength.
- US Treasury yields keep falling alongside equities in a risk-averse environment.
- USD/JPY could extend its decline toward the 104.20/30 price zone once below 105.00.
The USD/JPY pair has traded as low as 105.04 this Monday, a fresh multi-month low, as a result of ruling risk aversion. The market settled down during US trading hours amid the absence of relevant macroeconomic data, although the dismal mood prevailed. European equities edged marginally lower, but US indexes plunged, with banks’ stocks leading the way lower weighed by demand for safer assets. US Treasury yields reached fresh multi-year lows with the yield on the benchmark 10-year note down to 1.64%. There were no relevant macroeconomic releases from Japan, although the country will release the Domestic Corporate Price Index for July during the upcoming session, and June’s Tertiary Industry index, seen down by 0.1%.
USD/JPY short-term technical outlook
The technical picture supports the ongoing bearish case, as the USD/JPY pair is down for a fourth consecutive day. In the 4 hours chart, the pair stabilized well below moving averages, with the 20 SMA maintaining its downward slope at around 105.75 and over 200 pips below the larger moving averages. Technical indicators barely bounced from their daily lows before losing strength upward, supporting another leg lower. Below 105.00, the next relevant support area, and a possible bearish target is the 104.20/30 price zone, where the pair has relevant monthly highs and lows.
Support levels: 105.00 104.75 104.30
Resistance levels: 105.60 106.00 106.40
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