USD/JPY Forecast: Caution weighs on the pair

Valeria Bednarik FXStreet

USD/JPY Current price: 110.10

Japan’s June Corporate Service Price Index beat expectations by printing at 1.4% YoY.
US Durable Goods Orders are expected to have advanced 2.1% MoM in June.
USD/JPY is technically bearish and could accelerate its decline once below 109.80.

The USD/JPY pair approaches the 110.00 figure, undermined by the poor performance of global indexes. Equities are in the red, while bonds are up, as investors seek safety ahead of the US Federal Reserve monetary policy decision on Wednesday. The central bank is expected to maintain its current policy on hold but also provide hints on tapering, probably in the final quarter of the year.

Japan published the June Corporate Service Price Index, which beat expectations by printing at 1.4% YoY. Bank of Japan Governor Haruhiko Kuroda was on the wires, and he said that targeting 2% inflation has resulted in Japan no longer being in deflation, although his comments had no effect on price action. The US will publish June Durable Goods Orders, seen up 2.1% MoM. The core reading is expected to have advanced 0.7%.

USD/JPY short-term technical outlook

From a technical point of view, the USD/JPY pair is bearish. The 4-hour chart shows that the price broke below all of its moving averages, which anyway remain confined to a tight 10 pips range. The Momentum indicator heads firmly lower within negative levels, while the RSI consolidates around 46, reflecting prevalent selling interest. The slump will likely continue on a break below 109.80, now the immediate support level.

Support levels: 109.80 109.40 109.05

Resistance levels: 110.45 110.90 111.25

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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