USD/JPY Forecast: Bears not done yet

Valeria Bednarik FXStreet

USD/JPY Current price: 109.36

US Treasury yields plummeted as investors seek for safety.
Japan is set to publish July’s Tokyo inflation, with the core reading seen at 0.%.
USD/JPY has accelerated its decline, could fall towards the 108.00 level.

The USD/JPY pair broke lower and fell to 190.18, approaching the multi-month low set in July at 109.06. The broad dollar’s weakness persisted throughout the day but gained momentum around Wall Street’s opening, as stocks plummeted while investors rushed into government bonds, sending yields sharply lower. The yield on the 10-year US Treasury plunged to 1.15%, to end the day at 1.18%.

Japan published the July Jibun Bank Manufacturing PMI, which improved to 53 from 52.2 in the previous month. Early on Tuesday, the country will release July’s Tokyo inflation data. The annual Consumer Price Index is foreseen unchanged from the previous monthly reading, with the core reading at 0%.

USD/JPY short-term technical outlook

The USD/JPY pair trades at around 109.35 and has room to extend its slump. The 4-hour chart shows that it has accelerated its decline below a bearish 20 SMA, which gains bearish momentum below the longer ones. Additionally, technical indicators consolidate intraday losses within negative levels, with the RSI hovering near oversold readings. The pair could accelerate its decline on a break below July’s monthly low, then approaching the 108.00 figure.

Support levels: 109.05 108.70 108.25

Resistance levels: 109.85 110.20 110.50

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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