USD/JPY Forecast: Neutral-to-bullish, still below key 109.70 price zone
|USD/JPY Current Price: 109.42
- Japanese Tokyo inflation surprised to the upside remains below BOJ’s target.
- Wall Street closed mixed, US major indexes held near record highs.
- USD/JPY neutral stance persists, bearish only below 108.90.
The USD/JPY pair fell last Friday to 109.38 to end the day a few pips above this last. The pair was trapped between the broad dollar’s weakness and risk appetite, this last, limiting yen’s gains. US Treasury yields eased, while Wall Street closed mixed, with the three major indexes stuck around their opening levels, both failing to provide directional clues to the pair.
Japanese data released by the end of the week was mixed, as December Tokyo inflation beat the market’s expectations, up to 0.9% YoY. The core reading ex-fresh food resulted at 0.8%, above the 0.6% expected. The November unemployment rate in the country decreased to 2.2%, also better than expected, but Retail Trade fell by 2.1% YoY in November. Also, the preliminary estimate of November Industrial Production resulted much worse than anticipating, plummeting 8.1% YoY. The country won’t release relevant data this week.
USD/JPY short-term technical outlook
The USD/JPY pair has been hovering around the 109.50 price zone for over two weeks now, neutral yet bullish as it holds around December high at 109.72. The daily chart confirms so, as the pair is developing above all of its moving averages, while technical indicators remain within positive levels. In the 4-hour chart, the pair is also neutral, as it is stuck around a flat 20 SMA but holding above the larger ones, as technical indicators ease modestly around their midlines, without enough directional strength.
Support levels: 109.20 108.90 108.60
Resistance levels 109.75 110.00 110.40
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