USD/JPY Current price: 103.86

  • Japan has discovered a new covid strain, different from the UK and South African ones.
  • US Treasury yields retreated on the back of poor US macroeconomic figures.
  • USD/JPY is technically neutral but keeps developing below a long-term descendant trend line.

The USD/JPY pair remained lifeless on Friday, ending a third consecutive day little changed around 103.80. The pair was trapped between renewed dollar’s demand and falling equities and yields, as the market’s sentiment soured. US indexes closed the week in the red, although not far from their recent multi-year highs. US Treasury yields retreated on the back of poor US Retail Sales, which tumbled in December.

Data wise, Japan published the November Tertiary Industry Index, which contracted by 0.7% MoM. On Saturday, the country reported a new coronavirus strain, distinct from those coming from the UK and South Africa. The news may add to the risk-averse scenario. This Monday, the country will publish November Industrial Production and Capacity Utilization.  

USD/JPY short-term technical outlook

The USD/JPY pair is neutral daily basis, as it keeps finding support in a flat 20 SMA, but developing below the longer ones, which maintain their bearish slopes. Technical indicators head nowhere just above their midlines. Nevertheless, the risk is skewed to the downside, as the pair remains below a long-term descendant trend line coming from March 2020. In the near-term and according to the 4-hour chart, the pair is also neutral, as technical indicators hover directionless around their midlines while moving averages are confined to a tight 30 pips’ range.

Support levels: 103.50 103.15 102.70

Resistance levels: 104.15 104.50 104.90  

View Live Chart for the USD/JPY

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