USD/JPY Forecast: At risk of accelerating its slump

Valeria Bednarik FXStreet

USD/JPY Current price: 103.57

Wall Street soared on optimism, the dollar fell unevenly afterwards.
The Bank of Japan is having a monetary policy meeting this Thursday.
USD/JPY gains bearish traction after the first test of the 103.50 support.

The USD/JPY pair plunged to 103.44, its lowest in almost two weeks, recovering ahead of the close but ending the day of the day around 103.60. The pair edged lower as Wall Street surged to record highs, quite an unlikely scenario. On the other hand, Treasury yields were unable to find directional strength and continue to hover around their weekly opening levels.

Market´s optimism was backed by the new US administration. US President Joe Biden has nominated Janet Yellen as Treasury Secretary, who pledged to boost stimulus to support the economy. Japan will publish this Thursday the December Merchandise Trade Balance, expected to post a surplus of ¥942.8 billion, improving from the previous ¥366.8 billion. Additionally, the Bank of Japan will announce its latest decision on monetary policy.

USD/JPY short-term technical outlook

The USD/JPY pair is slowly gaining bearish potential, at least in the near-term. The pair has briefly pierced the 50% retracement of its January advance, which stands at 103.50, also a strong static support level. The 4-hour chart shows that it’s finishing the day around a directionless 100 SMA and below flat 20 and 200 SMAs. Technical indicators hold within negative levels but lack directional strength.

Support levels: 103.50 103.15 102.70

Resistance levels: 104.05 104.40 104.80

View Live Chart for the USD/JPY

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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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