USD/JPY analysis: bearish extension below 113.60

Valeria Bednarik FXStreet

USD/JPY Current price: 113.72

US Treasury yields' rally overshadowed by plummeting equities.
Japan and the US having banks' holidays at the beginning of the week.

The USD/JPY pair closed the week unchanged at around 113.70 as soft US employment data and the slump in worldwide equities offset rallying government bond yields. The pair reached 114.54 early Thursday, following comments from the Fed's head, Powell, suggesting more rate hikes in the horizon for the upcoming years, retreating from such level as equities suffered big from the run in Treasury yields which spurred fears of another crisis in EM. Long-term US Treasury yields reached multi-year highs, with the yield on the benchmark 10-year Treasury note peaking at 3.25% to close the week at 3.23%. Both countries are having local holidays on Monday which may result in the pair consolidating in a tight range during the upcoming sessions.

Technically, the pair remains in bullish ground according to the daily chart, as it keeps developing below its moving averages, with the 100 DMA heading north over 200 pips below the current level. Technical indicators in the mentioned chart have retreated from overbought readings, maintaining downward slopes but far above their midlines, leaving doors open for further slides ahead. In the 4 hours chart, the pair is trading above firmly bullish 100 and 200 SMA, while technical indicators entered in negative ground with strong downward slopes, in line with the longer term perspective.

Support levels: 113.60 113.30 112.95

Resistance levels: 114.00 114.40 114.75

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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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