USD/JPY analysis: bearish pressure eased, but at critical resistance area

USD/JPY Current price: 110.82

The USD/JPY pair had a rough week, but closed at its highest since late July, at 110.82, quickly reverting a slide down to 109.54 late Thursday, the result of another missile test from North Korea which spurred demand for safe-haven assets. However, the market is paying less attention to this kind of events lately, and the pair quickly recovered its previous upward strength. Also, the negative sentiment was offset by US Treasury yields which traded steady around their previous daily closes. The yield on the benchmark 10-year Treasury note stood at 2.20%,  while the yield on the 30-year Treasury bond ticked lower to 2.77% from previous 2.78%. The pair posted a 7-week high on Friday of 111.33,  but the daily chart shows that it was unable to sustain gains beyond the 100 DMA, settling around it. Furthermore, the same chart shows that the 200 DMA comes at 111.50, the level to break for a following bullish extension. The daily Momentum heads nowhere around its 100 level, but the RSI aims higher around 57, leaning the scale towards the upside. In the 4 hours chart, technical indicators present clear bearish divergences form price action, posting lower lows as the price advances since mid week, but still above their mid-lines, which limits the case for a steeper downward move. The 100 SMA in this last time frame aims modestly higher, still below the 200 SMA, both over 100 pips below the current level.

Support levels: 110.25 109.70 109.35

Resistance levels: 111. 05 111.50 111.90

View Live Chart for the USD/JPY

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