USD/JPY Forecast: Maintains bearish perspective near 2020 lows
|Current Price: 107.44
- USD/JPY managed to recover from 2020 lows but maintains a bearish tone.
- The yen remains favored as coronavirus concerns keep market's sentiment depressed.
The USD/JPY pair managed to recover some ground on Wednesday following a selloff triggered by the Fed decision to cut rates by 50 bps in a preemptive move to offset coronavirus’ adverse effects on the economy. Persistent concerns around the coronavirus outbreak have kept investors’ sentiment depressed, favoring the rally of the yen over the last weeks. The USD/JPY reversed sharply from a 10-month high of 112.22 struck on February 20 and dropped more than 500 pips to a five-month low of 106.84 after Fed’s move. However, upbeat economic data, ISM non-manufacturing PMI and ADP jobs, coupled with a bounce in US yields and oversold conditions, helped the dollar to recover some ground to end around 107.40.
USD/JPY short-term technical outlook
Nevertheless, the technical picture remains bearish as short-term indicators remain in negative territory while USD/JPY trades below its main moving averages. If the pair breaks below 2020 lows at the 106.85-80 zone, it could aim at October’s low at 106.48 en route to the 106.00 psychological level. On the other hand, the dollar needs to at least recover the 200-day SMA at 108.38 to ease the short-term pressure and stage a steeper recovery.
Support levels: 106.85 106.48 106.00
Resistance levels: 108.00 108.40 109.20
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