USD/JPY analysis: bounce not enough to change the negative tone

Valeria Bednarik FXStreet

USD/JPY Current price: 111.17

The USD/JPY pair bounced from a fresh monthly low of 110.61 to end the day a couple of pips above Friday's close. Data coming from Japan at the beginning of the day were generally soft, with the Nikkei Flash manufacturing PMI dropped to an eight-month low of 52.2 in July from 52.4 in June, while the Leading Index increased modestly when compared to April up to 104.6 from 104.2 in April. The Coincident index that reflects the current economic activity fell to 115.8 in May from a revised 117.1 in the prior month. US treasury yields bounced modestly, weighing on the yen during the US afternoon after a soft start to the day, with the 10-year benchmark up to 2.26% from previous 2.23%. The pair settled above a huge Fibonacci support at 110.90, the 61.8% retracement of its latest weekly advance after having spent most of the day below it, still at risk of falling further, as in the daily chart, the price remains below its 100 DMA, while technical indicators maintain their bearish slope within negative territory. In the 4 hours chart, technical indicators have bounced from oversold readings, but remain within negative territory while the price remains well below its 100 and 200 SMAs, limiting chances of a steeper advance.

Support levels: 110.90 110.55 110.20

Resistance levels: 111.45 111.90 112.35

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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