USD/JPY analysis: next short-term hurdle at 112.25

USD/JPY Current price: 112.56

  • Japan September Domestic Corporate Goods Price Index seen up 0.2% MoM and 2.9% YoY.
  • USD/JPY next big support at around 112.25, bearish below it.

The USD/JPY pair plunged to 112.53, a fresh 2-weekly low, amid a sell-off in US equities, with the DJIA losing at some point over 400 points. The run to safety was triggered by US Secretary Mnuchin, reviving trade war concerns as he stated that the US is watching Renminbi depreciation and that the currency needs to l be part on any future trade deal. US Treasury yields remained near multi-year highs, with the benchmark yield for the 10-year Treasury note stable around 3.22%, and the 2 -year note yield surging to 2.90%. Japanese data released at the beginning of the day were for the most encouraging, as Machinery Orders were sharply up in August, by 6.8% MoM and by 12.6% YoY, largely surpassing the market's expectations. Preliminary Machine Tool Orders for September increased by 2.8%, following a 5.1% gain in August. The strong figures indicate that capital spending is set to continue growing during the current fiscal year. The Asian country will release the September Domestic Corporate Goods Price Index during the upcoming Asian session.

After spending the week hovering around a bullish 100 SMA in the 4 hours chart, the pair moved well below it, somehow suggesting a farther deterioration of buying interest. In the mentioned chart, the 200 SMA offers now a dynamic support around 112.25, a probable bearish target should the pair break below the mentioned daily low. In the mentioned chart, the Momentum indicator has bounced from oversold readings but remain well into negative territory, while the RSI indicator has settled around 30, all of which maintains the risk skewed to the downside.

Support levels: 112.25 111.80 111.40

Resistance levels: 112.90 113.20 113.60

View Live Chart for the USD/JPY

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