USD/JPY analysis: bouncing from 2-week low, but bearish below 109.90

Valeria Bednarik FXStreet

USD/JPY Current price: 109.29

May Tokyo inflation expected to match April soft readings.
US Durable Goods Orders expected to have declined sharply in April.

The USD/JPY pair plunged to 108.94, a two-week low, as US Treasury yields fell sharply, while risk aversion took over the financial world early US session. The yield on the benchmark 10-year Treasury note fell to 2.96% after Fed's Minutes showed a tolerant stance to above 2.0% inflation. Later in the day, the US President Trump canceled the summit North Korean leader Kim Jong-un fueling demand for the safe-haven yen, yet at the same time, helping yields recovering some ground, with the 10-year yield hovering around 3.0% by the end of the day. The pair bounced from the mentioned low and is currently trading around 109.30, ahead of the release of Tokyo May inflation, seen unchanged from April's readings. This Friday, US Durable Goods Orders are expected to have declined sharply in April, and in such scenario, the dollar should remain weak. The 4 hours chart shows that the current recovery is corrective after the pair touched its 200 SMA, but remains below the daily ascendant trend line coming from early April, finally broken early Asia, while the 100 SMA gains downward traction, now converging with the trend-line around 109.90. In the mentioned chart, technical indicators are bouncing modestly from oversold readings, but remain into the red and without enough strength to support additional gains ahead.

Support levels: 109.00 108.65 108.30

Resistance levels: 109.90 110.25 110.60

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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