USD/JPY analysis: bears turning more courageous

Valeria Bednarik FXStreet

USD/JPY Current price: 110.92

Trade tensions underpin the safe-haven yen.
US Treasury yields modestly down on the day, adding to JPY gains.

The USD/JPY fell to a fresh weekly low of 110.83, with an attempt to recover ground during US trading hours meting selling interest around 111.20. The pair resumed its decline amid renewed trade tensions, following news that China announced a 25% charge on $16 billion worth of US goods. US Treasury yields retreated from Tuesday's highs, although the movements were shallow after the US auctioned $26B of 10-year notes, with the yield benchmark barely down, currently at 2.96%. News coming from Japan showed that the country's Trade Balance surplus widened slightly less than expected, but still posted a solid ¥820.5B in June. However, the Eco Watchers survey for July indicated that sentiment kept deteriorating in the country, with the measure of the current situation down to 46.6 from 48.1 and the outlook retreating from 50.0 to 49.0. The pair heads into the Asian session retaining its short-term negative tone, according to technical readings in the 4 hours chart, as it's now developing below its 100 and 200 SMA, but more relevant, below the mentioned 111.20, a Fibonacci level, now the immediate resistance. Technical indicators in the mentioned chart have extended their declines within negative levels, with the RSI approaching oversold readings but giving no signs of changing course. Below the daily low, the pair has room to test July 26 low at 110.58, while a steeper decline is expected below this last toward the 110.00 figure.

Support levels: 110.85 110.55 110.20

Resistance levels: 111.20 111.60 111.90

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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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