USD/JPY Forecast: Bleeding continues, lower lows on the cards
|USD/JPY Current price: 108.63
- Coronavirus-related fears fueled demand for safe-haven assets.
- US Treasury yields in free-fall, record lows for the 10-year note.
- USD/JPY about to challenge February monthly low at 108.31.
With 83,720 cases reported around the world and the death toll at 2,858, the coronavirus continues to be the one and only market motor. The USD/JPY pair collapsed, trading a few pips above the monthly low of 108.31. Wall Street is sharply lower ahead of the opening, with the DJIA down roughly 4,000 points so far this week. Meanwhile, the yield on the benchmark 10-year Treasury note reached a fresh all-time low of 1.16%. Fears of recession fuel the negative market’s mood.
Japanese data released this Friday was mixed. Tokyo January inflation rose by less-than-anticipated, up by 0.4% when compared to a year earlier. The core reading which excludes food and energy prices, resulted at 0.7%, below the expected and previous 0.9%. The January unemployment rate unexpectedly rose to 2.4% from 2.2%, while Housing Starts in the same month fell 10.1% YoY. Retail Trade was up by 0.6% monthly basis, while it fell by 0.4% on an annual base.
The US will publish today January Personal Income figures included core PCE inflation, Fed’s favourite inflation measure, foreseen at 1.7% from a previous 1.6%.
USD/JPY short-term technical outlook
The USD/JPY pair is oversold, but firmly bearish according to the 4-hour chart, as technical indicators keep heading south, despite being in extreme levels. In the mentioned time-frame, the pair is developing over 100 pips below all of its moving averages, with the 20 SMA already below the 100 SMA and about to cross the 200 SMA, all of which reflects the strength of sellers. The mentioned monthly low at 108.31 is the immediate support, with further declines expected once below it.
Support levels: 108.30 108.00 107.70
Resistance levels: 109.00 109.40 109.80
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