USD/JPY Forecast: Break below 106.00 becomes more likely
|USD/JPY Current Price: 106.95
- The BOJ left its monetary policy unchanged as expected, downgraded growth and inflation forecasts.
- A spike in coronavirus cases in Tokyo triggered a local alert, no lockdown just yet.
- USD/JPY declined on dollar’s self-weakness, could accelerate its slump once below 106.60.
The USD/JPY pair fell to 106.66, bouncing once again from the support area, yet finishing the day in the red just below the 107.00 mark. The decline was the result of the broad dollar’s weakness, falling despite risk-appetite took over financial markets, on hopes about progress in a coronavirus vaccine. The slide continued at the beginning of the American session, with the dollar trading inversely to Wall Street.
The Bank of Japan announced its latest decision on monetary policy, which had no impact on yen’s price. Policymakers maintained the man rate unchanged at -0.1%, and its 10-year JGB target around 0%, yet as expected, they downgraded forecasts. The economy is now seeing shrinking between 4.5% and 5.7% in the current fiscal year. Core inflation is expected to stay between -0.5% and -0.7% in the same period. Meanwhile, Tokyo raised its alert to the highest levels this Wednesday amid a spike in coronavirus contagions. The country won’t publish relevant data this Thursday.
USD/JPY short-term technical outlook
The USD/JPY pair is at risk of extending its decline, according to intraday readings. In the 4-hour chart, the pair is comfortably consolidating below all of its moving averages, which continue to lack directional strength. The Momentum indicator heads south below its midline, while the RSI stabilized around 41 after flirting with oversold readings. A stepper decline, towards the 105.90 price zone seems likely on a break below the 106.60 support area.
Support levels: 106.60 106.20 105.90
Resistance levels: 107.30 107.75 108.10
View Live Chart for the USD/JPY
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