USD/JPY analysis: decline could briefly pierce the 110.00 level

Valeria Bednarik FXStreet

USD/JPY Current price: 110.40

Japan to release December Machinery Orders, seen bouncing nicely after November's soft result.
US Treasury yields ease on renewed trade war optimism.

The USD/JPY pair eased from a fresh 2019 high of 111.12, closing the week with gains and Friday flat in the 110.40 region. The pair was trapped between opposing forces, as the greenback eased alongside government bond yields, while US major indexes soared to their highest for this year, ending the week with solid gains. Yields eased after US President Trump said that they are closer than ever to reach a trade deal with China, adding that he is willing to extend the truce period beyond March 1st. The yield on the benchmark 10-year Treasury note closed the week at 2.66%, after flirting with 2.72% mid-week. Preventing the Japanese currency from appreciating, data released these last few days pointed for a continued slowdown in the local economy. Japan will release Machinery Orders for December at the beginning of the week, foreseen up by 3.5% MoM from a previous flat reading.

The daily chart for the pair shows that the rally stalled right below the 100 and 200 DMA, with the largest one around 111.30, and the shorter at 111.70, providing dynamic resistances in the case the pair recovers the 111.00 mark. Technical indicators in the mentioned chart have pulled back modestly from overbought readings before paring their declines, now flat well into positive ground, a sign that selling interest around the pair is limited. Shorter term, and according to the 4 hours chart, however, the risk skews to the downside, as technical indicators head lower in negative ground, suggesting that the slide could continue as corrective mode toward a mild bullish 100 SMA, acting as support at around 109.80. A downward acceleration below this region could result in a steeper decline that could put at risk the positive momentum that started with the month.

Support levels: 110.10 109.75 109.40

Resistance levels: 110.65 111.00 111.30

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.