USD/JPY analysis: increasing risk of a bearish breakout

USD/JPY Current price: 106.95

  • Japanese trade balance expected to show a strong surplus in March.
  • Failure to advance despite dollar-positive news exacerbate bearish sentiment.

Despite the greenback was mostly up across the board, the USD/JPY pair was unable to advance, still unable to move away from the 107.00 price zone. Stocks edged higher, US data mostly positive, and US Fed policymakers' rhetoric overall hawkish, yet none was enough to discourage yen bulls. In fact, the pair lost some additional ground late US session,  as Wall Street retreated from its early peaks, while US Treasury yields softened, with the 10-year note yield down to 2.81% from the previous 2.83%. Japan will release its trade balance figures for March, with the total goods balance seen sharply up. Imports are expected to have grown 5.4% while exports are seen up 4.7%. The pair has posted a lower low and a lower high daily basis for a third consecutive day, leaning the scale toward the downside, although with nothing yet to confirm a bearish breakout. Shorter term, and according to the 4 hours chart, the pair continues developing above its 100 and 200 SMA, with the shortest advancing above the largest, and currently acting as dynamic support around 106.60, but with technical indicators holding within negative territory, with limited downward strength, also skewing the risk toward the downside.

Support levels: 106.60 106.20 105.90

Resistance levels: 107.35 107.70 108.10  

View Live Chart for the USD/JPY


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