USD/JPY Analysis: poised to challenge the 109.00 high

Valeria Bednarik FXStreet

USD/JPY Current price: 108.79

BOJ’s expected to keep monetary policy steady in its July decision.
US Treasury yields edged modestly lower ahead of Fed’s meeting.
USD/JPY broke its latest range to the upside, bullish above 109.00.

The USD/JPY pair has reached a fresh three-week high of 108.89, surging during US trading hours, despite softer-than-expected US data. The Japanese currency weakened ahead of the Bank of Japan monetary policy meeting that would take place early Tuesday. The central bank has been applying massive stimulus measures, yet inflation remains depressed. Policymakers have little room to maneuver, as the risk of steepening easing is higher than the benefits it may bring to the economy. The fact that most major central banks are announcing different stimulus measures limits further Japanese policymakers capability of acting. Meanwhile, US Treasury yields eased daily basis with the yield on the benchmark 10-year Treasury note down to 2.05% from 2.07% Friday.

USD/JPY short-term technical outlook

The USD/JPY pair holds near the mentioned high, although losing the positive momentum in the short-term, as, in the 4 hours chart, technical indicators began easing from near oversold territory, although holding far from daily lows. The 20 SMA, continues heading north below the current level, currently providing a short-term support at around 108.50. The pair also stands above the 61.8% retracement of its latest daily decline, at 108.30. As long as it holds above this last, chances of a downward extension are quite limited, while the bullish potential will increase on a break above 109.00, where it peaked this July.

Support levels: 108.40 108.00 107.65

Resistance levels: 109.00 109.35 109.80

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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