USD/JPY analysis: US Treasury yields help the pair bounce

Valeria Bednarik FXStreet

USD/JPY Current price: 111.02

USD/JPY seesaws around 111.00 but remains intrinsically bearish.
Strong static support area at 109.80.

The USD/JPY pair posted a fresh weekly high of 111.47 early Asia but was unable to sustain its gains and fell back to 110.68 mid-US session, as American data failed to impress. The pair trimmed part of its daily losses ahead of the close as US Treasury yields surged to their highest levels in almost a year with the 10-year note yield briefly surpassing 2.60%. Yet at the same time, the greenback held weak, while US equities retreated from record highs amid renewed fears of a government shutdown. The early rally was attributed to headlines indicating that BOJ's officers said that monetary stimulus is needed for now, alongside with soft macroeconomic figures coming from Japan, as industrial production rose less than estimated in November, up 0.5%, matching October's figure but below the expected 0.6%. Annualized production, however, surged 3.6% against an expected 1.9%. The Japanese calendar will remain empty this Friday. Technically, the 4 hours chart shows that the pair continues developing below its 100 and 200 SMAs, while technical indicators have managed to bounce modestly after reaching their mid-lines, suggesting a limited potential upward despite the latest recovery. Renewed selling pressure below the mentioned low, should open doors for a steeper slide towards the 109.80 region, the next strong static support area.

Support levels: 110.60 110.20 109.85

Resistance levels: 111.20 111.60 112.00

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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