USD/JPY analysis: correcting lower short-term, but bulls hold the grip

Valeria Bednarik FXStreet

USD/JPY Current price: 111.99

The USD/JPY pair edged higher for a second consecutive week, despite retreating sharply on Friday, to close the week right below the 112.00 mark. The USD/JPY pair advanced up to 112.71 on Thursday, the highest since mid July, backed by a strong recovery in US Treasury yields, which rallied to their highest in six weeks following Fed's monetary policy announcement. The 2-year yield, the most sensitive to Fed's decisions, advanced to its highest in almost nine-years, whilst the 10-year note benchmark reached 2.28%. On Friday, however, the Japanese yen gain ground, whilst yields retreated, on renewed geopolitical tensions over North Korea. US President Trump and Korean leader Kim Jong Un exchanged threats and insults, with the second announcing another nuclear test, which so far, didn't happen. The price's turnaround remains as corrective according to the daily chart, as the pair settled well above its 100 and 200 SMAs, also above the 23.6% retracement of its latest bullish run at 111.40. Technical indicators in the mentioned chart are pulling back from overbought readings, which is not enough to confirm a steeper slide, but support an upcoming downward extension. In the 4 hours chart, technical indicators continue consolidating within positive territory, whilst the price remains well above the 100 and 200 SMAs, with the shortest gaining upward traction above the largest, around 110.00.

Support levels: 111.75 111.40 111.00

Resistance levels: 112.10 112.40 112.85

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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