USD/JPY Forecast: Bullish above 110.45… but 10-yr T-yield may play spoilsport
|Resistance: 110.45 (trend line hurdle), 110.62 (23.6% fib of 118.66-108.13), 111.58 (Apr 10 high), 111.86 (50-DMA)
Support: 109.59 (session high), 109.38 (5-DMA), 109.09 (10-DMA), 108.81 (200-DMA)
USD/JPY - Falling channel is intact, RSI at a neutral level
Daily chart
- Monday’s failure at the falling channel resistance followed by a drop to 109.66 levels suggests the corrective rally from the low of 108.13 may have run out of steam, although the support at a 5-DMA level of 109.39 could hold.
- The daily RSI is at 50.00 levels and awaits breach of the falling trend line, while the daily MACD has confirmed bullish crossover.
- A daily close above 110.45 would push RSI above the descending trend line; add credence to the bullish MACD and open doors for 111.58 levels.
On the downside, a daily close below support at 109.48 (support offered by the trend line drawn from Mar 14 high and Apr 10 high) could yield a re-test of 108.13 (Apr 17 low) levels.
Focus on US 10-year treasury yield
The 10-year yield failed to hold above 2.31% (double top neckline) on Monday. The double top neckline was breached to the downside last week, opening doors for a sell-off to 2.00%.
A daily close above 2.31% would signal bearish invalidation and open doors for a more sustained rally in the USD/JPY pair.
Note: There is a strong positive relationship between the 10-yr treasury yield and the USD/JPY pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.