USD/JPY analysis: bearish momentum extends US bond auction

Valeria Bednarik FXStreet

USD/JPY Current price: 108.54

Japan National and Tokyo CPI figures up next.
US weakness fuels yen's gains to fresh 4-month highs.

The Japanese yen extended its rally against its American rival to a new 4-month high of 108.52, with the pair having spent most of the US afternoon not far above the level, and heading into the Asian opening, clinging on to its recent losses. Asian and European equities closed in the red, while US data disappointed, adding to the bearish case of the pair, which remains in the red as despite US equities continue marching to record highs, yields are little changed from Wednesday's closing levels, and not far from multi-month highs after a strong auction. Early Friday, Japan will release its Tokyo and National inflation figures, seen little changed from their previous levels. If inflation comes worse than expected, the yen could lose some of its bullish steam. Technical readings in the 4 hours chart, however, support a continued slide ahead, as the price continues moving away from bearish 100 and 200 SMAs, while technical indicators stand in extreme oversold territory, with the RSI heading south at 21. The pair could correct higher on an advance above the 108.80/90 price zone, the immediate resistance, while a steady decline will likely expose 2017 low of 107.31.

Support levels: 108.50 108.10 107.75

Resistance levels: 108.85 109.25 109.60

View Live Chart for the USD/JPY

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.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.