USD/JPY: bearish potential intact, but 112.00 holding for now

USD/JPY Current price: 112.19

  • US Treasury yields leading current USD/JPY decline.
  • US data kick-started with a modestly encouraging release.

The USD/JPY pair's recovery late Tuesday stalled at 112.39, from where the pair retreated during the current European morning, holding dangerously close to the 112.00 level. Despite the positive tone of equities, and the dollar's modest advance against its European rivals, the yen appreciates on the back of easing US-T yields, as at pre-market trading, the 10-year note yield is down to 2.45% from Tuesday's close of 2.46%.

The US macroeconomic calendar opened with a minor report, which anyway offered an encouraging result, as the number of mortgage applications surged by 0.7% last week, up from a previous -4.9% according to MBA. Still pending of release are the official ISM manufacturing PMI and FOMC Minutes by the end of the day.

The pair is technically bearish short-term, as the price continues developing below its 100 and 200 SMAs, with the shortest gaining bearish traction above the largest in the 4 hours chart, while technical indicators hold within negative territory, with the RSI gaining downward traction around 32, anticipating some further slides. The 112.00 level is critical, as it bounced from it multiple times during the past month. A clear break below it should lead to a steeper decline, with 111.60 being the next bearish target.

Support levels: 112.00 111.60 111.20

Resistance levels: 112.40 112.75 113.10

View Live Chart for the USD/JPY


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