USD/JPY analysis: advancing, but upward potential limited

Valeria Bednarik FXStreet

USD/JPY Current price: 109.31

Japanese Nikkei Manufacturing PMI seen unchanged at 54.4 in January.
US Treasury yields at fresh multi-year highs underpin the USD/JPY pair.

Solid US macroeconomic data and a confident Fed pushed the USD/JPY pair to its highest for this week, although gains have been for the most shallow compared to the monthly slide. The pair heads into Thursday's opening around 109.30 after hitting 109.44, underpinned by fresh multi-year highs in US Treasury yields, as the 10-year note benchmark touched 2.75% for the first time in over a decade. The advance, however, was limited by equities, which lost their shine after a strong start to the day post-Fed. Japan will see the release of its Nikkei Manufacturing PMI for January during the upcoming session, expected unchanged at 54.4. The longer-term perspective remains bearish for the pair despite this latest recovery, although in the short-term, the advance could extend, considering technical readings in the 4 hours chart, as indicators have extended their advances into positive territory, to reach fresh 3-week highs. Nevertheless, the pair continues developing well below bearish moving averages, with the 100 SMA now around 110.30 in the mentioned chart, still moving much faster than the 200 SMA, a clear sign of bears' domination.

Support levels: 108.60 108.25 107.90

Resistance levels: 109.25 109.70 110.10

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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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