USD/JPY analysis: bearish case continues building up

USD/JPY Current price: 111.90

  • Japanese yen soared on falling US Treasury yields.
  • Sour tone of worldwide indexes keeping the USD/JPY near its lows.

The USD/JPY pair spent the day in a tight range above 112.00, resuming its decline at the end of the day to a fresh multi-week low of 111.82, as US indexes accelerated their declines. The pair came under pressure at the beginning of the day with risk aversion taking over following comments from US President Trump, who once again criticized the Fed's tightening policy, by saying the central bank is going "loco." US Treasury yields retreated sharply on his words, adding to yen's momentum. US softer-than-expected inflation maintained the pair subdued, despite risk-off sentiment cooled partially during US trading hours. Japan released the September Domestic Corporate Goods Price Index, up by 0.3% MoM and by 3.0%. The country will release some minor money data this Friday that hardly reaches the price.

The short-term picture for the pair indicates that the risk remains skewed to the downside, as in the 4 hours chart, it remained below its 100 and 200 SMA, with this last offering an immediate resistance in the 112.30 region, as the pair has been unable to advance beyond it since the day started. Technical indicators in the mentioned chart have corrected from extreme oversold levels but quickly resumed their declines, now accelerating their downward slopes within extreme levels. The current 111.90 region is a strong static support,  and renewed selling interest here favors an extension toward the 111.20 price zone. The bearish pressure could ease on a recovery above 112.60, quite unlikely at this point.

Support levels: 111.90 111.55 111.20

Resistance levels: 112.35 112.60 113.00

View Live Chart for the USD/JPY

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