Analysis USD/JPY: risk aversion favors a break of the 107.80 support

Valeria Bednarik FXStreet

USD/JPY Current price: 108.21

Tensions between the US and Iran keep safe-havens on demand, with the Yen and Gold making the most of it.
US Retail Sales and the Michigan Consumer Sentiment Survey expected to trigger some action across the FX board.

Safe havens are on demand this Friday, amid tensions between the US and Iran over the blasts of two oil tankers in the Gulf of Oman. The US accused Iran of the attacks, while the latest said that it was an 'unfounded' accusation. Crude oil prices remain strong amid investors fretting about a supply shortage, while the Japanese Yen is among those benefiting from the run to safety, trading against the greenback at its highest for the week.

In the data front, Japan released April's Industrial Production, which rose by 0.6% MoM and declined by 1.1% when compared to a year earlier as expected. Chinese data released afterward fueled the negative sentiment surrounding the financial world, as Industrial Production rose by less-than-anticipated, up by 5.0% YoY in May, although Retail Sales in the same period were up by 8.6%, beating the market's expectations of 8.1%. The US session will bring the US Retail Sales, foreseen up by 0.6% in May and after falling by 0.2% in the previous month. The Retail Sales Control Group figure is expected at 0.4% vs. the 0.0% previous. The country will also release Industrial Production and Capacity Utilization for May, and the preliminary estimate of the Michigan Consumer Sentiment Index for June, anticipated at 98 vs. the previous 100.

The USD/JPY pair trades in the 108.10 price zone early Europe with the bearish potential intact, according to technical readings in the 4 hours chart, as the pair keeps sliding below its moving averages, with a flat 20 SMA capping the upside intraday and the larger ones accelerating their declines above it. Technical indicators in the mentioned chart extend their declines within negative levels, keeping the risk skewed to the downside.

Support levels: 108.10 107.80 107.55

Resistance levels: 108.30 108.60 108.90

View Live Chart for the USD/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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