USD/JPY Analysis: bouncing from critical support

Valeria Bednarik FXStreet

USD/JPY Current Price: 108.01

Risk aversion fueled demand for the Japanese yen, dollar strength offset it.
USD/JPY recovered the bullish potential despite the dismal market mood.

The Japanese yen appreciated against all of its major rivals with the weekly opening amid a run to safety following weekend events in the Middle East, as the attack on oil facilities in Saudi Arabia disrupts up to 50% of the country’s oil production. The USD/JPY pair gapped lower at the weekly opening, reaching a daily low of 107.49. It later filled the gap amid persistent dollar’s demand, and in spite of continued demand for safe-haven assets. US Treasury yields edged lower, with the yield on the benchmark 10-year Treasury note bottoming at 1.81% and stabilizing at 1.83% at the end of the day. Equities, in the meantime, edged lower worldwide. Japanese markets were closed Monday due to a local holiday and will resume activity this Tuesday. There are no data scheduled to release in the country.

USD/JPY short-term technical outlook

The USD/JPY pair is battling to regain the 108.00 level, bullish after bouncing from a critical Fibonacci support, the 61.8% retracement of its August decline. In the 4 hours chart, the pair is a handful of pips above a directionless 20 SMA, while technical indicators aim north within positive levels, keeping the risk skewed to the upside. Nevertheless, to confirm the bullish momentum, the pair would need to break above the high set last week at 108.25. Bulls could lose control if the pair break below 107.45, the mentioned Fibonacci support.

Support levels: 107.90 107.45 107.10

Resistance levels: 108.25 108.50 108.80

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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