USD/JPY: short-term bearish as long as below 105.25
|USD/JPY Current price: 104.98
- Yen broke higher on risk aversion, waiting for Wall Street for next direction.
- US Durable Goods Orders expected to bounce, but not enough to change the trend.
The USD/JPY pair sunk to 104.63, its lowest since November 2016 as risk aversion, triggered late Thursday by escalating tensions between China and the US over a trade war, took its toll on worldwide equities, leading to a run to safety. Despite trading in the red, European equities have managed to pared losses and bounce some, with the USD/JPY pair following through, although trading below the former yearly low of 105.24 achieved last February. A light macroeconomic calendar has exacerbated the quietness, but the US session will kick in with the release of February Durable Goods Orders, expected to bounce after falling sharply in January, later followed by some housing data. The figures aren't enough to set trend, but could bring some action in this last day of the week.
Technically, the pair is short-term bearish as long as it holds below the mentioned 105.25 region, and technical readings in the 4 hours chart support the case of further declines as technical indicators have resumed their declines after a modest upward correction, holding within oversold territory. In the same chart, moving averages maintain bearish slopes far above the current level, with the 100 SMA now around 106.10. Below 104.60, the pair has scope to extend its decline sub-104.00, while an upward correction could be expected on a steady advance above 105.25.
Support levels: 104.60 104.20 103.70
Resistance levels: 105.25 105.60 106.10
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