USD/JPY analysis: holding above November's low, but not for long

USD/JPY Current price: 111.07

  • BOJ's actions are not consistent with Kuroda's words.
  • USD/JPY has a bearish breakout point at 110.83, November monthly low.

The USD/JPY pair edged lower for a fourth consecutive day on Friday, ending the day at 111.07, after trading as low as 110.91. Yen's strength was a result of BOJ's actions last week, as the central bank reduced strongly the amount of its long-term bond-buying. Despite that on their latest meeting, policymakers reaffirmed that they will maintain monetary easing, actions are not consistent with those words, and investors are aware of it. The Bank of Japan is having a monetary policy meeting on January 23rd, and market players will be looking there for a more hawkish tone, as data have been lately supportive of economic recovery. The pair is a handful of pips above 110.83, November monthly low and sort of a line in the sand, as bears will likely gain confidence on a break below the level. From a technical point of view, the pair is biased lower according to the daily chart, as it settled below its 100 and 200 DMAs, meeting selling interest around this last on attempts to recover ground. In the same chart, technical indicators maintain their bearish slopes near oversold readings. Shorter term, and according to the 4 hours chart, the 100 SMA extended its decline above the 200 SMA, both in the 112.60 price zone, while the Momentum corrected oversold conditions before turning flat below its mid-line, as the RSI indicator consolidates around 34, leaning the scale towards the downside, but suggesting that selling interest is hesitating around the 111.00  figure.

Support levels:  110.85 110.50 110.10

Resistance levels: 111.60 112.00 112.40  

View Live Chart for the USD/JPY

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