USD/JPY Price Forecast: Rising odds for a re-test of 106.00
|- USD/JPY is accelerating the downside below the 107.00 mark on Friday.
- Lower US yields, risk aversion lend support to the Japanese yen.
USD/JPY is trading in fresh 2-week lows following the drop in US yields to levels last seen in April around 0.57%. Adding to the demand for the safe havens, market concerns over the pick-up in coronavirus cases across the world appear to have impacted on investors’ prospects of what it supposed to be a strong recovery post-pandemic.
Furthermore, recent news has re-shifted the focus to President Trump – this time following a US Supreme Court ruling – ahead of the November elections and this could have impacted on the broad risk appetite trends.
Near-term Price Outlook
If the selling bias in USD/JPY picks up extra pace, then the focus of attention should be the lower bound of the current consolidative range in the 106.00 neighbourhood. The 200-day SMA near 108.30, on the other hand, remains the initial near-term target in case bulls regain the upper hand and a strong risk-on sentiment returns to the markets. Further up is located the 110.00 neighbourhood. If cleared, this should open the door to a potential test of 2020 highs in the 112.00 region. On the downside, if 106.00 is breached on a sustainable fashion, then there are no relevant supports until the February-March sell-off to the vicinity of 101.00 (March 9).
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