USD/JPY Forecast: Mild-recovery irrelevant in terms of trend
|USD/JPY Current price: 107.29
- Japan’s Q1 GDP indicated the country has fallen into recession.
- Rallying equities underpin the pair as Fed’s Powell said more ammunition available.
- USD/JPY neutral in the short-term, bullish potential limited.
The USD/JPY pair is up this Monday, although holding within familiar levels. Market’s moves are limited, with major pairs trading within familiar levels. Equities are up as US Federal Reserve’s chief Powell said that the central bank would continue to support the economy. In general, his comments were dovish, as he added that the downturn may last until late 2021 or until there’s a vaccine for coronavirus.
Japan has fallen into recession, according to the Q1 GDP estimate, which anyway was better than anticipated. The economy contracted by 0.9% in the three months to March, and by 3.4% when compared to the first quarter of 2019. The economic decline is expected to deepen further amid the ongoing coronavirus crisis which holds back consumer spending and economic activity. The US will publish today the NAHB Housing Market Index for May, foreseen at 33 from 30 previously.
USD/JPY short-term technical outlook
The USD/JPY is hovering just below the 23.6% retracement of its latest daily advance at 107.33, after meeting buyers near the 61.8% retracement of the same rally. The 4-hour chart shows that the pair continues to develop between mild-bearish 100 and 200 SMA, while technical indicators stand flat above their mid-lines. The pair is neutral and with limited bullish potential, as it would need to break above 107.70 to become more attractive for bulls.
Support levels: 106.90 106.65 106.30
Resistance levels: 107.30 107.70 108.00
View Live Chart for the USD/JPY
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