USD/JPY analysis: wild action expected as Japan returns from holidays
|USD/JPY Current price: 107.84
- Japanese markets will re-open after a long week of holidays, and the Nikkei could be extremely volatile.
- US Nonfarm Payrolls report to be a make it or break for USD/JPY this Friday.
The Japanese Yen retains its solid gains against the greenback, unable to recover the 108.00 figure. The yen appreciated sharply at the beginning of the day with the pair finding a bottom around 105.00, not far from 2018 low of 104.60. Sentiment remained sour throughout the day, with worldwide indexes spending the day in the red, as US Treasury yields falling further, also weighed by soft US data, with the yield on the benchmark 10-year note down to 2.56%, its lowest in almost a year. Japanese markets will re-open after a long week of holidays, and the Nikkei could be extremely volatile until it catches up with the rest, leading to some wild action around JPY crosses. The Nikkei Manufacturing PMI for December will be out, expected unchanged from the previous reading at 52.4.
The USD/JPY pair set a high at 108.30 during US trading hours, but quickly retreated to the current 107.80 price zone, short-term bearish according to readings in the 4 hours chart, as it´s developing well below bearish 100 and 200 SMA, while technical indicators resumed their declines in negative territory and after correcting extreme oversold conditions. The pair is trading roughly 100 pips above a key support level, 106.75, as the pair bounced from the level a couple of times after the initial crash.
Support levels: 107.50 107.20 106.75
Resistance levels: 108.00 108.30 108.60
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