USD/JPY Forecast: Still at risk of falling
|USD/JPY Current price: 108.65
- Comments from Trump’s advisor Kudlow brought relief.
- Japanese Industrial Production surprised to the upside in September.
- USD/JPY modest recovery fell short of affecting the ongoing bearish trend.
The USD/JPY pair recovered from a daily low of 108.23 and trades around 108.65, former relevant support, as the market´s mood stabilised following comments from US President Trump’s Advisor, Kudlow. He declared that a trade deal with China is in its final stages, though “not done yet.” The news halted the run to safety, with safe-haven assets slowly giving up ground. Still, Treasury yields remain depressed and near weekly lows, while equities are posting modest gains in Asia and Europe.
Japanese data released overnight was encouraging as Industrial Production was up by 1.7% in September. Capacity Utilization in the same month rose by 1.0%, well above the -0.6% expected. The upcoming American session will bring October Retail Sales, seen up by 0.2% after falling by 0.3% in the previous month.
USD/JPY short-term technical outlook
The USD/JPY pair is still at risk of falling, as, in the 4-hour chart, technical indicators remain within negative levels, having lost their upward strength. Meanwhile, the pair continues developing below the 20 and 100 SMA, with the shortest crossing below the larger, both around 108.80 providing resistance. Chances for a recovery seem limited at the time being, with sellers probably surging as the pair approaches the 109.00 region.
Support levels: 108.20 107.90 107.50
Resistance levels: 108.80 109.10 109.40
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