USD/JPY analysis: still bearish but not so depressed

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.16

The Japanese yen continues to benefit from the demand for safe-haven assets and lower yields. Mounting tensions between the US and Iran and the lack of expectations about a trade deal between the US and China, together with the expectations that major central banks will likely cut interest rates, offer support to the yen that on Tuesday was among the top performers. Against the US Dollar posted modest gains but finished far from the lows. The pair rose back above 107.00 despite lower US yields. The 10-year dropped below 2%. Data from the US offered no help to the USD/JPY as it continues to point to a slowdown in growth. What it did favor moderately the greenback were comments from FOMC member James Bullard (voted at the latest meeting for a rate cut) who hinted at only one rate cut. On Wednesday, Durable Goods Orders, Trade Balance, and Inventory data is due in the US. Geopolitical tensions and trade wars continue to be a key driver for the pair.

The USD/JPY posted the fourth daily close between 107.30 and 107.15. The trend remains bearish, but the pair shows difficulties in holding far from the mentioned area. Another signal of a not so strong trend move is the fact that it closed far from the fresh 5-month low it reached at 106.76.
The daily chart shows the RSI flat under 30 and price well below the 20 SMA (108.30) with no immediate risk to the bearish outlook. Ahead of the Asian session, the pair seems consolidating but still unable to reclaim the 20 SMA in the four hours chart at 107.25. The US dollar is likely to face resistance between 107.25 and 107.50. A slide back under 107.00 will increase the bearish pressure, exposing Tuesday’s lows and 106.50

Support levels: 107.00 106.75 106.50

Resistance levels: 107.50 107.90 108.15

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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