USD/JPY Analysis: no pause in the run to safety

Valeria Bednarik FXStreet

USD/JPY Current Price: 106.05

Japanese worse-than-expected data fueled demand for the safe-haven yen.
Wall Street plunged, with the three major indexes down over 2.0% daily basis.
USD/JPY decline set to continue as long as it trades below 106.70.

The USD/JPY pair has fallen to a fresh multi-month low of 105.78 at the beginning of the week, to later establish around the 106.00 figure, where it spent most of the day. The yen appreciated on ruling risk aversion, keeping the green throughout the day as not only government bond yields collapsed to fresh multi-year lows, but US indexes lost over 2.0% on the day. The Japanese Markit Services PMI for July, released at the beginning of the day, resulted in 51.8, worse than the 52.3 expected and the previous 51.9, spurring concerns about slowing economic growth in the country. Tepid US data also favored a downward move in the pair. Japan will publish during the upcoming Asian session June Labor Cash Earnings and Overall Household Spending.

USD/JPY short-term technical outlook

The USD/JPY pair hold has met selling interest at around 106.34 on an intraday attempt to regain the upside, maintaining the negative stance according to intraday technical readings, as it held near its lows as indicators corrected extreme oversold conditions. In the 4 hours chart, the 20 SMA extended its vertical slump below the larger moving averages and above the current level, currently at around 107.40. Indicators have recovered from their lows, but remain within oversold levels, keeping the risk skewed to the downside as long as it remains below the daily high of 106.67.

Support levels: 105.75 105.40 105.10

Resistance levels: 106.35 106.70 107.00

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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