USD/JPY analysis: downward correction coming, but far from bearish
USD/JPY Current price: 112.32
- Japan to return after a long weekend, Nikkei´s opening may trigger some action in mute USD/JPY.
- Bullish interest around the USD/JPY pair decreased, but bears won't return unless 111.40 gives up.
The USD/JPY pair was unable to attract investors, holding all through the day at around 112.30. Much of the pair's quietness was due to a holiday in Japan that kept local trading desks empty. Equities in Europe and the US traded mixed but didn't move far from their opening levels, failing to provide directional clues, although US Treasury yields advanced firmly, but weren't able to push the pair higher, somehow anticipating an increased selling interest. The yield on the benchmark two-year Treasury note reached 2.61%, its highest level since August 2008, while for the 10-year note yields peaked at 2.88%. There are no scheduled macroeconomic releases in Japan for this Tuesday. The 4 hours chart shows that the price remains well above bullish 100 and 200 SMA, while technical indicators eased, the RSI heading lower around 59 and the Momentum turning higher right after entering negative territory, all of which suggest that the pair can correct lower, particularly on a break below 112.15 the immediate support. Nevertheless, the pair is far from bearish and a decline could be short-lived if buyers decide to add on dips. The key to the downside is the 111.40 level, as only below it, bulls will likely give up.
Support levels: 112.15 111.80 111.40
Resistance levels: 112.60 113.00 113.40
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.
