USD/JPY analysis: bulls not willing to give up despite risk-off

Valeria Bednarik FXStreet

USD/JPY Current price: 110.22

US Treasury yields, equities´ pullback sent the USD/JPY sub-110.00 intraday.
FOMC's optimistic stance did little for equities, mute reaction from USD/JPY.

The USD/JPY pair fell to 109.55 its lowest in over a week, as US Treasury yields and worldwide equities fell sharply on the back of US President Trump comments late Tuesday, after he said that there was a "substantial chance" his summit with North Korean Kim Jong-un won't take place in June, adding that he was "not satisfied" with the recent trade talks with China and that the recent developments were just a start. Macroeconomic data released in Japan at the beginning of the day was disappointing, as the preliminary Japanese Nikkei Manufacturing PMI for May released at the beginning of the day resulted at 52.5, missing market's expectations of 53.6, while the All Industry Activity Index was unchanged in March. US data, on the other hand, indicated that the economy keeps growing at a healthy pace. FOMC Minutes somehow hinted a rate hike for June, but the reaction was mute in equities and therefore in the USD/JPY pair. Japan will release its Coincident Index and the Leading Index for March during the upcoming session, although yields and equities will likely lead the way. The pair is now trading at around 110.20, recovering above the daily ascendant trend line and the 100 SMA in the 4 hours chart, both pierced early Europe. Technical indicators in the mentioned chart have managed to bounce from overbought levels, but are rather reflecting the ongoing correction than suggesting more gains ahead. Nevertheless, if the pair manages to extend its recovery beyond 110.45, May 15th high, chances are of further recoveries ahead for the upcoming sessions.

Support levels: 109.90 109.55 109.15

Resistance levels: 110.45 110.80 111.20

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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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