USD/JPY analysis: bearish risk eased, but remains dormant

Valeria Bednarik FXStreet

USD/JPY Current price: 113.11

The USD/JPY pair added roughly 100 pips in the US afternoon, following comments from US President Donald Trump, vowing to make a shocking announcement on tax's reform during the upcoming weeks, in a meeting with airline industry leaders. The headlines wake-up risk appetite, reviving the Trump-trade and sending US equities to all-time highs, weighing on the safe-haven yen. During the upcoming Asian session, Japan will release its Domestic Corporate Goods Price Index figures for January, which will hardly affect the yen. News coming from the US, despite minor, were also encouraging, with weekly unemployment claims down to 234K for the week ending February 4th, against previous 246K. The pair stands at fresh weekly highs, and the bearish potential has eased, but not yet reverted. In the 4 hours chart, the pair pared gains a few pips below a bearish 20 SMA, whilst technical indicators are turning modestly lower within positive territory, indicating that the upward potential is limited. The pair bounced for fourth consecutive day from its 100 DMA, now around 111.80, and held above the 38.2% retracement of November/December around 112.00, the support area that the pair needs to break to resume its bearish trend. On the other hand, it will take an extension beyond the daily high of 113.29 to see the pair extending its advance towards the 114.00/50 price zone.

Support levels: 111.60 111.25 110.80

Resistance levels: 112.10 112.60 113.00

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.

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