USD/JPY Forecast: Advancing within range, 109.25 at sight

Valeria Bednarik FXStreet

USD/JPY Current price: 108.63

Fear eases, but the pandemic crisis keeps deepening worldwide.
Global indexes in recovery mode, US Treasury yields still depressed.
USD/JPY recovers from Fibonacci support, bullish potential moderate.

The American currency kept recovering throughout the Asian session, although its advance has been moderate, as the pandemic crisis deepens. The number of cases in the US, Italy and Spain keeps growing, forcing authorities to take tougher measures. Social distancing guidance in the US has been extended to April 30, which means that economic activity will continue to shrink. Same happens in most Europe, with the outbreak dictating laws.

Financial markets fluctuate between stability and panic, with optimism out of the formula. The USD/JPY pair trades around 108.50, underpinned by the better performance of Wall Street leading to gains in their overseas counterparts. US Treasury yields, in the meantime, hold ground.

Japan released overnight February Larger Retailers’ Sales, which came in better than expected, up by 0.2% in the month. Industrial Production in the same period rose 0.4%, also beating forecast, while the unemployment rate remained steady at 2.4%. The US will release the March Chicago Purchasing Managers’ Index and the CB Consumer Confidence Index.

USD/JPY short-term technical outlook

The USD/JPY pair is gaining bullish traction in the short-term, recovering further from around the 38.2% retracement of its latest daily advance. In the 4-hour chart, the pair is battling with its 20 and 200 SMA, both converging with the current level, while the 100 SMA converges with the mentioned Fibonacci support at around 107.70. The Momentum indicator is entering positive territory, although the RSI lacks strength and stands around 47. The next Fibonacci resistance comes at 109.25, a possible bullish target should the greenback keeps recovering.

Support levels: 107.70 107.30 106.95

Resistance levels: 108.90 109.25 109.60

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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