USD/JPY Forecast: At risk of extending the decline

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.32

Japan May Leading Economic Index seen contracting to 73.2 from 77.7.
US Treasury yields were unable to retain intraday gains, finished the day unchanged.
USD/JPY down on broad dollar’s weakness, immediate support at 106.95.

The USD/JPY pair surged to a daily high of 107.76 during the Asian session amid risk-appetite taking over the financial world. Asian indexes posted substantial gains, led by Chinese optimism on an economic comeback, which later extended into European and American markets. Broad dollar’s weakness, however, pushed the pair lower in the last trading session of the day, with the pair piercing the bottom of its latest range and ending the day in the 107.30 price zone.

US Treasury yields advanced intraday on the back of upbeat local data, but trimmed gains ahead of the close, adding pressure on the pair. During the upcoming Asian session, Japan will publish the preliminary estimate of the May Leading Economic Index, foreseen at 73.2 from 77.7 in the previous month. The country will also publish the Coincident Index for the same month, seen at 80.7 from 80.1 previously.

USD/JPY short-term technical outlook

The USD/JPY pair is at risk of falling further, as the pair has finally moved away from the 38.2% retracement of its latest daily decline. In the 4-hour chart, it’s barely holding above a flat 100 SMA, and below the 20 and 200 SMA, while technical indicators head firmly lower within negative levels. The bearish case will be firmer if the pair losses 106.95, the next Fibonacci support level.

Support levels: 107.20 106.95 106.60

Resistance levels: 107.50 107.95 108.30

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 tests nine-day EMA support near 1.1850

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1870 during the Asian hours on Friday. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming steady momentum. RSI has eased but remains above 50, indicating momentum remains constructive for the bulls.

GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus

The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.

Gold recovers swiftly from weekly low, climbs back closer to $5,000 ahead of US CPI

Gold regains positive traction during the Asian session on Friday and recovers a part of the previous day's heavy losses to the $4,878-4,877 region, or the weekly low. The commodity has now moved back closer to the $5,000 psychological mark as traders keenly await the release of the US consumer inflation figures for more cues about the Federal Reserve's policy path.