USD/JPY Forecast: Cautious optimism plays against the greenback

Valeria Bednarik FXStreet

USD/JPY Current price: 109.03

Hopes that the pandemic is starting to slowdown keeps boosting the market’s sentiment.
Japan Leading Economic Index improved in February according to preliminary estimates.
USD/JPY neutral-to-bullish in the short-term needs to advance beyond 109.40.

The American dollar continues to ease against most major rivals, as the market’s mood keeps improving. Hopes that the coronavirus pandemic is starting to slow down are behind the latest movements, amid improving numbers in the larger focus of contagion. The numbers, however, are still outrageous, with the number of global cases above 1.35M and roughly 75K deaths.

The USD/JPY pair trades lower in range, as, opposing to the dollar’s broad weakness, equities and yields are substantially up. Asian and European equities advance after Wall Street rallied on Monday, while the yield on the 10-year Treasury note jumped to 0.75%. Japan published overnight the preliminary estimate of the February Leading Economic Index, which came in at 92.1, beating the market’s forecast. The Coincident Index for the same month was also better than anticipated, rising to 95.8. The US macroeconomic calendar has nothing relevant to offer today.

USD/JPY short-term technical outlook

The USD/JPY pair is consolidating just below the 23.6% retracement of its latest daily advance at around 109.20 The 4-hour chart shows that it’s neutral-to-bullish, as it continues to develop a few pips above a congestion of moving averages. Technical indicators are aiming marginally higher within positive levels, but below their daily highs and without momentum enough. The pair would need to extend its advance past Monday’s high of 109.38 to gather additional strength and be able to approach the 110.00 area.

Support levels: 108.65 108.25 107.90

Resistance levels: 109.40 109.80 110.15

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: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.