USD/JPY Analysis: bears ready to take down the 105.00 mark

Valeria Bednarik FXStreet

USD/JPY Current price: 105.20

Japanese inflation at factory levels fell by 0.6% YoY in July.
US annual inflation seen upwardly revised to 1.7% YoY.
USD/JPY aiming to extend its decline toward the 104.20/30 price zone.

The USD/JPY pair has reached a daily high of 105.58 during Asian trading hours, resuming its decline as Europe came in, on the back of risk aversion. Bond yields continue to fall, with negative yields spreading throughout the Union, and that of the US 10-year Treasury note down to 1.62%. Equities, in the meantime, follow the lead of Wall Street, with all local indexes trading in the red.

The dismal market mood is a combination of trade tensions between the US and China generating a global economic slowdown, rising odds for a hard-Brexit, and worldwide central banks responding to the ongoing uncertainty with more stimulus measures.

Overnight, Japan released the Domestic Corporate Goods Price Index, which remained flat monthly basis in July, and declined by 0.6% when compared to a year earlier, missing the market’s expectations. The Tertiary Industry Index fell in June by 0.1% as expected. The US will publish today the final version of July inflation, seen up by 1.7% YoY vs. the previous estimate of 1.6%. Core CPI is foreseen steady at 2.1%.

USD/JPY short-term technical outlook

The USD/JPY pair held so far above Monday’s multi-month low of 105.04, but trades a few pips above it, maintaining the negative bias according to intraday readings. As said in previous updates, the pair has a long-term support in the 104.20/30 region, and a possible bearish target should the decline extend below the 105.00 figure. In the 4 hours chart, the 20 SMA keeps limiting the upside by heading lower above the current level, and far below the larger ones. Technical indicators in the mentioned chart have resumed their declines within negative levels, although their bearish momentum is limited at the time being. The pair could correct higher if it manages to recover above 105.60, the immediate resistance.

Support levels: 105.00 104.75 104.30

Resistance levels: 105.60 106.00 106.40

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.