USD/JPY analysis: equities at record highs helped the pair bounce

Valeria Bednarik FXStreet

USD/JPY Current price: 107.85

US Treasury yields hit multi-year lows amid concerns about a global economic downturn.
Wall Street reached record highs, partially offsetting the negative effect of yields on USD/JPY.

The USD/JPY pair is trading in the 107.80 area, little changed daily basis. Earlier in the day, the pair fell to 107.52, dragged lower by plummeting government bond yields. The yield on the benchmark 10-year Treasury note hit 1.93% its lowest since November 2016, amid prevalent concerns about a global economic downturn. The pair recovered despite mostly discouraging US data, as US indexes remained on the winning side, with the Dow and the S&P reaching all-time highs. Earlier in the day, Japan saw the release of the Markit Services PMI for June, which resulted at 51.9, worse than the 52.0 forecast although better than the previous 51.7. The Asian country will only release minor data during the upcoming Asian session, hardly relevant in terms of market movements.

The USD/JPY pair trades around the 38.2% retracement of its latest bullish run after nearing the 61.8% retracement of the same rally earlier in the day, this last at 107.45. In the 4 hours chart, the pair continues developing below all of its moving averages, which lack directional strength, as technical indicators remain within negative levels, the RSI heading marginally higher at around 48 while the Momentum turned back south, all of which indicates a limited upward potential.

Support levels: 107.45 107.10 106.80

Resistance levels: 107.95 108.20 108.55

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.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

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: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

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.