USD/JPY analysis: yen poised to extend gains
|USD/JPY Current price: 109.55
- Japanese April National inflation seen steady at 0.4% YoY.
- US T-yields collapsed on growth concerns, fueling demand for safe-haven yen.
The USD/JPY pair fell below the 110.00 figure to trade as low as 109.45 amid broad dollar's decline following worse-than-expected US data and plummeting US government debt yields on a run to safety. The 10-year note yield collapsed to 2.29%, its lowest level in over a year-and-a-half, as Markit May preliminary PMI showed that growth in business activity slowed sharply in most major economies. The Japanese Nikkei Manufacturing PMI came in at 49.6, according to preliminary estimates for May, falling into contraction territory and missing the market's expectations of 50.2. The country will release April National Inflation early Friday seen up by 0.4% when compared to a year earlier.
The USD/JPY pair trades a couple of pips above the daily low ahead of the Asian opening, having declined below the 61.8% retracement of the latest bullish run measured between 109.01 and the 110.66 high at 109.65, the immediate resistance. In the 4 hours chart, the price is far below its 20 and 100 SMA, both converging around 110.20, the Momentum indicator maintaining a strong bearish slope and the RSI trying to stabilize around 34, all of which keeps the risk skewed to the downside for the upcoming sessions.
Support levels: 109.40 109.15 108.80
Resistance levels: 109.65 109.90 110.20
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