USD/JPY: ready to challenge the key 110.00 figure
|USD/JPY Current price: 110.32
- Japanese data generally discouraging but no love for the greenback.
- Busy US calendar, data need to impress to prevent the greenback from collapsing.
The USD/JPY pair trades near the 4-month low set this week at 110.13, with the yen strong despite rising equities and Treasury yields. Trading has been quite erratic these last few days, normal in these winter holidays' week, with the dollar battered by the US government partial shutdown and Trump's dislike of the Fed's monetary policies.
Not that Japanese data released overnight was encouraging. The only positive news was Industrial Production, which fell by less-than-expected, down by 1.1% in December when compared to the previous month. November Retail Trade was up by 1.4%, well below the previous 3.5% and the expected 2.2%, while Larger retailers' sales declined by 0.7% in the same month. The Bank of Japan released its Summary of Opinions, with shows that policymakers are concerned over the outlook for the global economy, also about inflation.
The US calendar will be quite busy in this last trading day of the week, with multiple releases although no first-tier data. Anyway, non-impressive figures will likely weigh the greenback further lower, despite movements could be limited by reduced volumes.
The short-term picture for the pair is bearish, as it's developing comfortable below the 38.2% retracement of the March/October rally at 110.75, the immediate resistance. In the 4 hours chart, the 100 and 200 SMA gain downward strength far above the current level, while technical indicators maintain downward slopes, the Momentum within neutral levels but the RSI currently at 37, anticipating additional declines ahead.
Support levels: 110.15 109.80 109.45
Resistance levels: 110.75 111.05 111.40
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