USD/JPY Forecast: Bullish potential limited, bearish below 107.10

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.91

Wall Street advanced, but US Treasury yields remained depressed and near record lows.
Japan’s Retail Trade seen down in February, the unemployment rate seen steady at 4.0%.
USD/JPY recovered from a fresh one-week low, but it’s still at risk of falling.

The USD/JPY pair is ending Monday unchanged from Friday’s close around the 108.00 level, recovering from a daily low of 107.11. The Japanese yen appreciated at the beginning of the day amid a dismal market mood following weekend news. Asian equities were sharply down, closing the day in the red and weighing on their overseas counterparts, although European indexes crippled into the green ahead of the close. US Treasury yields, on the other hand, remained depressed, with the yield on the benchmark 10-year note ending the day at around 0.64%, capping the pair’s bullish potential.

The upcoming Asian session will bring Japan’s February Retail Trade and unemployment figures. Large Retailers’ Sales are foreseen down by 2.8% in the month, while the unemployment rate is seen steady at 2.4%. The country will also release Industrial Production, seen at 0.1% from 1.0% previously. Later in the day, the country will release housing-related data from February.

USD/JPY short-term technical outlook

The USD/JPY pair has been consolidating for most of the past two sessions just above the 38.2% retracement of its latest daily advance. In the short-term, the bullish potential seems limited, as the pair has spent the day developing between the 100 and 200 SMA, both lacking directional strength, while below a firmly bearish 20 SMA. Technical indicators in the mentioned time-frame have bounced from oversold levels, but the RSI turned flat at around 37 while the Momentum is moderating its strength upward below its mid-line.

Support levels: 107.50 107.10 106.65

Resistance levels: 108.25 108.60 109.00

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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