USD/JPY analysis: trapped between stocks' rally and yields' retracement

Valeria Bednarik FXStreet

USD/JPY Current price: 113.86

The USD/JPY pair extending its consolidative phase around the 114.00 level, unable to react to worldwide stocks, with European benchmarks establishing fresh yearly highs and Wall Street running to all-time records. Yields, however, fell this Wednesday, with the 10-year note benchmark at 2.35% from Tuesday's 2.39%, putting the pair up against the top. The pair has drawn a potential double top around 114.80, but remains above the neckline of the figure, which stands at 112.86, December 4th low. The figure has a 200 pips' height, establishing a probable bearish target at 110.80 in the case of a bearish breakout. In the short term, the 1 hour chart shows that the price is trading between its 100 and 200 SMAs, bottoming around this last for the day at 113.41, while technical indicators have recovered from near oversold readings, but turned flat within negative territory. The 100 SMA in the mentioned time frame stands flat around 114.00, converging with the 23.6% retracement of the 2011/15 rally. In the 4 hours chart, the price is well above a bullish 100 SMA, the Momentum indicator heads modestly lower below its mid-line, and the RSI turned higher, now around 51, failing to provide clear clues on what's next for the pair.

Support levels: 113.60 113.15 112.80

Resistance levels: 114.20 114.55 114.90

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.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.