USD/JPY analysis: slowly grinding higher

Valeria Bednarik FXStreet

USD/JPY Current price: 113.61

Japan Q4 Tankan Manufacturing Index and Nikkei December PMI up next.
US Treasury yields stabilize near weekly highs underpinning the pair.

The USD/JPY pair reached 113.70 in the US afternoon, holding nearby at the end of the day, as the dollar gathered some attention, compliments to weakness in the European currencies-bloc. The pair eased from such high as Wall Street underperformed, weighed by concerns about progress in US-China trade relationship. The encouraging headlines from early this week were overshadowed by news that China arrested a couple of Canadian diplomats, seen as retaliation over Meng's arrest. Furthermore, US President Trump said that he would interfere in the Huawei's case if that helps to ease trade talks, but clearly, he doesn't have such power. US Treasury yields, in the meantime, held on to weekly gains, with the yield on the benchmark 10-year Treasury note trading around 2.90%. Coming up next, Japan will release the Q4 Tankan Manufacturing Index, seen decreasing to 17 from 19 in Q3. Next will be the preliminary December Nikkei Manufacturing PMI, foreseen at 52.3 vs. 52.2 previously, followed by the October Industrial Production figure.

The pair is up daily basis, settling above its previous weekly high, and while technical readings continue leaning the risk to the upside, the upward momentum faded. In the 4 hours chart, the 100 and 200 SMA continue running parallel in quite a tight range, although advancing, while technical indicators turned south within positive readings. The risk of a bearish extension will be higher on a break below 112.90, while bulls will likely take over on an extension above 114.00.

Support levels: 113.10 112.90 112.55

Resistance levels: 113.70 114.00 114.40

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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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