USD/JPY analysis: backed by yields, but near key support

Valeria Bednarik FXStreet

USD/JPY Current price: 112.14

The USD/JPY pair heads into the Asian session above 112.00, but off the daily high of 112.52 achieved post-Fed, also the highest since mid July. The Japanese yen is down for third consecutive day, underminned by advancing US Treasury yields, up to their highest in six weeks, on news the US Central Bank will start unwinding its balance sheet, while keeping doors opened for a third rate hike for the year. The 10-year note benchmark settled at 2.28%, up from 2.24%, while the 30-year note yield posted a modest advance, to 2.82% from 2.81%. The Bank of Japan will have its monetary policy meeting during the upcoming Asian session, but is largely anticipated to be a non-event. Japan will also release July's industrial activity index, expected at -0.1% from previous 0.4%. From a technical point of view, the 4 hours chart maintains the risk towards the upside, despite the late US session pullback, as indicators just retreated from overbought readings, but are far above their mid-lines, whilst the 100 SMA keeps advancing modestly above the 200 SMA, both well below the current level. Tuesday's high at 111.87 is key, as a break below it will likely anticipate some further slides ahead.

Support levels: 111.90 111.50 111.20

Resistance levels: 112.50 112.85 113.30

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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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