USD/JPY Forecast: Consolidating gains near yearly high
|USD/JPY Current price: 111.32
- US politicians reached a deal on a $2 trillion stimulus package.
- Stocks soared in Asia and Europe, but US futures have turned negative.
- USD/JPY holding on to gains, although losing bullish momentum.
The USD/JPY pair is comfortably trading above 111.00, holding near its monthly high of 111.70. The market’s sentiment remains upbeat amid positive news coming from the US, related to stabilizing the financial sector throughout the coronavirus crisis. Not only the US Federal Reserve slashed rates but also announced unlimited QE. Also, US Senators has reached a deal on a $2 trillion stimulus package after over a week of back and forth. The bill will likely be passed on Friday.
Asian and European equities are substantially higher, following the lead of Wall Street, which posted one of its largest daily advance on record this Monday. Nevertheless, US futures have turned negative. US Treasury yields are marginally higher, although the yield on the benchmark 10-year note stands at 0.82%, of the daily peak of 0.88%.
The Bank of Japan published the Summary of Opinions, focused on the need for strengthening monetary stimulus amid the ongoing coronavirus crisis. The US will later publish February Durable Goods Orders, foreseen down by 0.8% in the month. The figures are pre-crisis, which means they will likely have a limited effect on currencies.
USD/JPY short-term technical outlook
The USD/JPY pair is neutral-to-bullish, consolidating monthly gains. In the 4-hour chart, the 20 SMA has lost part of its bullish strength but continues to provide intraday support to the pair. Technical indicators hold well into positive levels, although the RSI heads nowhere around 60. The pair has met sellers several times these days in the 111.60 price zone. A clear break above it should lead to a retest of the yearly high at 112.22.
Support levels: 111.00 110.70 110.35
Resistance levels: 111.65 111.90 112.25
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