USD/JPY analysis: yen poised to extend its advance

Valeria Bednarik FXStreet

USD/JPY Current price: 109.91

Japanese data limits yen's gains but run to safety will likely continue.
US Treasury yields and Wall Street led the way lower for USD/JPY.

The USD/JPY pair fell to its lowest in over a month, reaching 109.73 amid resurgent demand for safe-haven assets. Dismal European data was the catalyst that triggered the run to safety, lately exacerbated by the behavior of US Treasury yields, as the curve inverted for the first time since 2007, with the yield on the 3-month Treasury bill hitting 2.459% while the yield on the 10-year Treasury note touched 2.437%, triggering alerts about a possible recession coming to the US. Adding fuel to the fire, Wall Street collapsed, with the 3 major indexes posting their largest intraday decline since early January. Japanese data released lately has been far from encouraging, preventing the pair from falling further, and increasing odds of an upcoming bounce. Japan will release the January All Industry Activity Index at the beginning of the week, seen at 0.2% vs. the previous -0.4%.

The USD/JPY pair bearish case is strong, according to the daily chart, as the pair fell roughly 150 pips below its 100 and 200 DMA, after spending pretty much two weeks struggling around them. Technical indicators in the mentioned chart head firmly lower within negative levels and nearing oversold readings with no signs of changing course. In the shorter term, and according to the 4 hours chart, the pair shed over 100 pips after failing to surpass its 200 DMA, currently around 110.90, while the 100 DMA turned lower far above the longer one. The Momentum indicator stalled at oversold levels, while the RSI indicator keeps heading south, currently at 23, both adding to the bearish case.

Support levels: 109.70 109.30 109.00

Resistance levels: 110.25 110.60 110.95

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 weakens to near 1.1900 as traders eye US data

EUR/USD eases to near 1.1900 in Tuesday's European trading hours, snapping the two-day winning streak. Markets turn cautious, lifting the haven demand for the US Dollar ahead of the release of key US economic data, including Retail Sales and ADP Employment Change 4-week average.

GBP/USD stays in the red below 1.3700 on renewed USD demand

GBP/USD trades on a weaker note below 1.3700 in the European session on Tuesday. The pair faces challenges due to renewed US Dollar demand, UK political risks and rising expectations of a March Bank of England rate cut. The immediate focus is now on the US Retail Sales data.

Gold sticks to modest losses above $5,000 ahead of US data

Gold sticks to modest intraday losses through the first half of the European session, though it holds comfortably above the $5,000 psychological mark and the daily swing low. The outcome of Japan's snap election on Sunday removes political uncertainty, which along with signs of easing tensions in the Middle East, remains supportive of the upbeat market mood. This turns out to be a key factor exerting downward pressure on the safe-haven precious metal.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash (BCH) trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.