USD/JPY analysis: short-term downward correction possible
USD/JPY Current price: 110.67
- US Treasury yields, equities, moved away from weekly lows, backing the pair's recovery.
- Risk aversion could trigger a downward corrective movement after the pair neared 111.00.
The USD/JPY pair hit Friday 110.93 surpassing its previous June high by a couple of pips, to close with gains for a fourth consecutive day, a few pips below it. Tokyo inflation released by the end of the week resulted above market's forecast, up 0.6% vs. the previous 0.4% or the expected 0.5%, still well below the desired 2.0%, while the Japanese unemployment rate fell to 2.2%, the lowest level since 1974. Wall Street managed to advance while US Treasury yields moved away from weekly lows, supporting the recovery in the pair, although the positive momentum, alongside with USD/JPY one, faded by the end of the week with the release of the US Michigan Consumer Sentiment Index for June, which was revised lower to 98.2 from 99.3. Early Sunday, Japan will release the Tankan manufacturing indexes for Q2, and the Nikkei Manufacturing PMI for June, this last seen downwardly revised to 53.0 from 53.1. Technical readings in the daily chart favor another leg higher ahead, although the upward strength remains limited. Nevertheless, the pair managed to recover after struggling at the beginning of the week with its 200 DMA, while technical indicators maintain upward slopes above their midlines, the RSI actually at 2-week highs. Shorter term, and according to the 4 hours chart, the pair is at risk of correcting lower, as it holds above its 100 and 200 SMA, but technical indicators have retreated sharply from near overbought levels, any way holding well above their midlines.
Support levels: 110.45 110.15 109.90
Resistance levels: 110.95 111.40 111.80
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.
