USD/JPY analysis: at a brink of a bearish breakout

Valeria Bednarik FXStreet

USD/JPY Current price: 110.39

USD/JPY holding near its daily lows ahead of a busy Japanese calendar.
US Treasury yields retreat as bond surged as the US Government shutdown got reversed.

The USD/JPY pair fell to 110.24 barely recovering in the final hours of the US session, undermined by BOJ's monetary policy announcement and falling yields. The Bank of Japan has left its monetary policy unchanged as expected but was slightly upbeat on its inflation outlook. Governor Kuroda, however, remarked that maintaining the strong easing is still necessary and that is no time of thinking about trimming QQE. Furthermore, he added that prices are still weak and that the variations on monthly bond-purchases are a matter of market's conditions rather than anything else. US Treasury yields eased as bonds surged after the US Senate averted the government shutdown on Monday, with the 10-year yield down to 2.62% from the previous 2.66% and the yield for the 30-year bond retreating also 3 basis points. Japan is set to release its December trade data the Leading an Coincident indexes, and the Nikkei Manufacturing PMI for January during the upcoming Asian session, which could boost the Japanese currency. Technically, the pair is poised to extend its decline, given that in the 4 hours chart, it's developing well below its 100 and 200 SMAs, both bearish, while technical indicators hold directionless within negative territory, although with no clear directional strength. This month low at 110.19 is the immediate support ahead of a stronger one in the 109.80 price zone, with a break below this last favoring additional declines for the upcoming sessions.

Support levels: 110.20 109.85 109.50

Resistance levels: 110.55 110.90 111.30

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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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