USD/JPY analysis: yen bulls take over

Valeria Bednarik FXStreet

USD/JPY Current price: 105.97

USD/JPY breaks lower after faltering around 106.60.
Japanese markets back after a holiday, chances of a strong reaction in Asia.

A holiday in Japan kept the USD/JPY pair range bound for most of the day, with the pair hovering around 106.20/30, despite some good hints coming from US equities and yields, both sharply up right after Wall Street's opening. It resumed its decline, however, following the US Central Bank monetary policy decision, as the Fed rose its key rate benchmark by 25bps as expected, but the dot-plot suggests only three rate hikes for this year, against the four anticipated. Furthermore, the economic outlook for this year was left unchanged, with modest growth revisions for the upcoming years, sending the pair back sub-106.00 by the end of the day. During the upcoming Asian session, Japan will publish the March preliminary Nikkei PMI, expected at 54.3 from a previous 54.1, alongside with the January All Industry Activity Index, seen down 1.7% from a previous 0.5% advance. Technically, the 4 hours chart shows that the pair is back below its 100 SMA, and while technical indicators pared declines, the Momentum stands in neutral territory and the RSI around 42, skewing the risk toward the downside, with the market eyeing 105.24, the multi-month low set last February. It needs to recover beyond the 107.00 level to change the negative outlook, and that seems quite unlikely after this decision.

Support levels: 105.90 105.60 105.25

Resistance levels: 106.20 106.60 107.00

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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