USD/JPY Analysis: fundamental background keeps favoring the yen

Valeria Bednarik FXStreet

USD/JPY Current Price: 106.62

Equities bounced, but the USD/JPY pair ignored the recovery.
US Treasury yields finished the day little changed after FOMC’s Minutes.
USD/JPY continues consolidating between Fibonacci levels, upside limited by 106.65.

Dull trading prevailed around the USD/JPY pair, still capped by a key Fibonacci resistance at 106.65. A robust comeback in equities failed to boost the pair, as equities’ advance was led by tech-related shares, still cheering the latest US Commerce Department’s decision on Huawei. Treasury yields edged higher at the beginning of the day but ending it little changed, with the yield on the benchmark 10-year note at 1.57% at the end of the day, down from a daily high of 1.61%. The fundamental factors that usually trigger risk-averse movements remain firmly in the background, which means that there is little room for Yen declines.

The Japanese macroeconomic calendar didn’t offer relevant data this Wednesday, although the country will see the release of the August preliminary Nikkei Manufacturing PMI foreseen at 49.8 from 49.4 in the previous month-

USD/JPY short-term technical outlook

The USD/JPY pair maintains the neutral stance, trading below the 38.2% retracement of its latest daily decline at around 106.65. In the 4 hours chart, the pair has spent the day trapped between the 20 and 100 SMA, with the largest maintaining its downward slope around the current level. Technical indicators in the mentioned chart hover just above their midlines, lacking directional strength. The 23.6% retracement of the same slide comes at 106.05, providing a relevant support, as a break below it should trigger a more relevant slide.

Support levels: 106.05 105.60 105.25

Resistance levels: 106.65 106.95 107.20

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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