USD/JPY Forecast: Bears prepare to push it lower

Valeria Bednarik FXStreet

USD/JPY Current price: 109.69

Japanese data was generally encouraging, with Industrial Production up 6.2% in June.
US Treasury yields retreated on Friday while Wall Street closed in the red.
USD/JPY is technically bearish and could pierce the 109.00 level.

The USD/JPY pair ended the week with losses in the 109.60 price zone amid the broad dollar’s weakness. The pair bottomed on Friday at 109.35, recovering some ground ahead of the close as speculative interest took some profits out of the table. However, the advance was limited by falling US government bond yields and the poor performance of equities. Wall Street closed in the red, while the yield on the 10-year Treasury note settled at 1.22%, following the release of softer-than-anticipated US inflation-related figures.

Japanese data was generally encouraging. The June Unemployment Rate contracted to 2.9%, while Retail Trade improved 3.1% MoM in May. Also, June Industrial Production rose 6.2% MoM, while Housing Starts in the same period were up 7.3%. On a down note, Large Retailer Sales declined 2.2%.

USD/JPY short-term technical outlook

The USD/JPY pair is bearish according to the daily chart. The pair hovers around its 100 SMA while a bearish 20 SMA provided resistance throughout the week. Technical indicators lack directional strength but hold within negative levels. In the 4-hour chart, the pair is bearish. It is developing below a bearish 20 SMA, which extends its slump below the longer ones, as technical indicators head firmly south within negative levels, signaling further slides are likely.

Support levels: 109.35 108.90 108.50

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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