USD/JPY analysis: intraday advance falling short of supporting more gains ahead

Valeria Bednarik FXStreet

USD/JPY Current price: 112.41

Yen remains strong amid prevalent sour sentiment.
Upbeat growth US data limited the intraday decline of USD/JPY.

After Tuesday's false bearish breakout, the USD/JPY pair extended its recovery up to 112.73, from where the pair began retreating on the back of weaker equities and despite strong US growth data. This last, at least, maintained the decline limited, with the pair now heading into the Asian opening around 112.45. Adding pressure on the JPY, US Treasury yields slid, following the release of US weaker-than-expected housing figures. The yield on the benchmark 10-year Treasury note fell to 3.12%, after being as high as 3.17%, holding at daily lows by the end of the day.

The preliminary Japanese Nikkei Manufacturing PMI for October came in at 53.1, beating the previous 52.5. The August Leading Index in the country rose by more-than-estimated, printing 104.5 from the previous 103.9, also surpassing the preliminary estimate of 104.4. The Coincident Index, however, which reflect the current economic activity, came in at 116.7, below the initial estimate of 117.5, although above the previous 116.1. There won't be relevant releases coming from Japan this Thursday.

From a technical point of view, the 4 hours chart shows that the early advance was contained by the 200 SMA, while the 100 SMA continues nearing the larger one from above, and as technical indicators head lower within negative ground, indicating that the pair could extend its decline during the upcoming sessions, particularly if the market's mood remains sour. The high set this week at 112.89 is a key resistance, with gains beyond it indicating easing selling interest.

Support levels: 112.15 111.85 111.60

Resistance levels: 112.90 113.20 113.50

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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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