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

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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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