USD/JPY analysis: stuck at the lower end of its weekly range, bearish

USD/JPY Current price: 112.35

  • Yen refuses to give up as US Treasury yields keep falling.
  • USD/JPY key resistance at 112.60 now, bearish below 112.00.

Despite broad-based dollar's strength, the USD/JPY pair refuses to advance and trades at the lower end of its weekly range, around the 112.30 level after hitting 111.98 early Asia. The poor performance of Asian and European equities backed yen's advance during the first half of the day, as all of the enthusiasm about the US tax reform and the EU-UK divorce agreement faded as the week passes with no fresh headlines. Nevertheless, Wall Street seems to be reverting the negative mood, with all of the three major indexes trading in the green. What's weighing on the pair are no doubts US Treasury yields, which have been slipping ever since the day started. The 10-year note yield is currently at 1.32% after ending Tuesday at 1.36%. The 2-year yield eased less than the 30-year note one, with the yield-curve flattening even further. An inverted yield-curve is seen as a sign of recession.

Japan will release its October leading and coincident indexes during the upcoming Asian session, with September readings having already suffered downward corrections and October numbers expected below them.

Technically, the 4 hours chart for the pair shows that the risk remains towards the downside, as despite it has managed to advance modestly above an anyway bearish 100 SMA, technical indicators hold within bearish territory, with very limited upward strength. The pair would need to accelerate through 112.60, the immediate resistance, to shrug off the negative stance,  yet renewed selling interest below the 112.00 threshold will likely result in a slide towards the 111.20 region, a strong static support.

Support levels: 112.00 111.60 111.20

Resistance levels: 113.10 113.45 113.80

View Live Chart for the USD/JPY

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