USD/JPY analysis: yen gains despite equities and yields

USD/JPY Current price: 107.09

  • The JPY is up against a vulnerable dollar, ignoring bullish clues for the pair.
  • Data coming from Japan little relevant in a risk-vulnerable environment.

The rally in equities didn't help the USD/JPY pair this Monday, which lost its early positive tone and edged lower during US trading hours, although confined to its usual range around the 107.00 figure. Wall Street soared on relief, as the attack from the US and its allies on Syria was seen as a one-time warning, but the yen edged higher on broad dollar's weakness. Even US Treasury yields managed to gain some ground this Monday, with the 10-year note threshold reaching 2.87% to finally settle at 2.83%. There were no macroeconomic releases at the beginning of the week coming from Japan, and US figures failed to impress. Early Tuesday, Japan will offer Industrial Production and Capacity Utilization data, seen improving from its previous readings. In the meantime, the pair keeps retreating from a daily high of 107.60, and gaining bearish traction in the short term, as in the 4 hours chart, technical indicators entered negative territory with sharp bearish slopes, although given that the 100 and 200 SMA stand in the 106.30/60 region, the downside potential is limited. The pair would need to break below 106.20 to actually enter a bearish move, while steady gains beyond 108.00 should indicate further gains ahead.

Support levels: 107.00 106.60 106.20

Resistance levels: 107.60 108.00 108.40

View Live Chart for the USD/JPY

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