USD/JPY analysis: yen poised to extend gains

Valeria Bednarik FXStreet

USD/JPY Current price: 112.43

Investors looking for fresh clues coming from Fed.
Continued strength in Wall Street limiting JPY gains.

The Japanese yen gained ground against its American rival, although positive US data and a sharp rally in Wall Street limited JPY's advance. The USD/JPY pair traded as low as 112.17 right after the US opening, as yields fell, but then recovered, with the 10-year note benchmark unchanged at 2.37% but the 30-year note interest down to 2.77% from previous 2.79%. The yield-curve keeps flattening, currently at levels not seen in ten years, raising concerns over the economic future of the US. The Fed will release the Minutes of its latest meeting this Wednesday, the most relevant event of the week, with investors looking for clues about coming rate hikes. The 4 hours chart for the pair shows that the price remains well below its 100 and 200 SMAs, with the shortest approaching the largest from above, reflecting market's bearish sentiment towards the pair. At the same time, the Momentum indicator aims higher within neutral territory, while the RSI gains traction downwards around 43, giving mixed signals but anyway leaning the scale towards the downside. Monday's high at 112.71 is the immediate resistance, followed by the 113.00/10 region, with some stability above this last required to reduce the bearish pressure.

Support levels: 112.20 111.90 111.60

Resistance levels: 112.75 113.10 113.45

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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