USD/JPY Current price: 110.48
- US-China trade talks interrupted demand for the yen, while Turkish crisis capped the advance.
- USD/JPY pair at risk of falling further, particularly on a break below 110.10.
The Japanese yen appreciated by the end of the week, helped by softer-than-expected US data, and steady US Treasury yields. The USD/JPY pair closed the week little changed at around 110.48, as despite risk-related sentiment improved by the end of the week, the ongoing uncertainty in different political fronts made it tough for yen holders to unwind positions in the safe-haven currency. News that the US and China are resuming trade talks helped to improve market mood, but the crisis in Turkey is far from averted and could continue affecting EM. The yield on the benchmark 10-year Treasury note finished the week at around 2.86%, modestly lower on Friday. Japan won't offer macroeconomic data until next Wednesday, while the focus will remain on the US-China meeting in Washington next August 20th and 21st. In the daily chart, the pair has been pressuring a bullish 100 DMA the whole week, but so far was unable to clearly break below it, while technical indicators are in bearish mode, the Momentum retreating sharply from its mid-line, but the RSI ranging just above 40, lacking strength, all of which maintains the risk skewed to the downside. Shorter term, and according to the 4 hours chart, the pair is also biased lower, as it keeps developing below its 100 and 200 SMA, while the RSI aims lower around 42 and the Momentum heading higher in neutral levels. A steeper decline could be expected on a break below 110.10, now the immediate support.
Support levels: 110.10 109.80 109.50
Resistance levels: 110.80 111.20 111.50
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