USD/JPY Forecast: Consolidating losses, risk skewed to the downside

Valeria Bednarik FXStreet

USD/JPY Current price: 103.79

Japanese National inflation contracted by more than anticipated in October.
US Treasury Secretary Mnuchin asked the Fed to return unused funds.
USD/JPY is trading near weekly lows without directional momentum.

The USD/JPY pair consolidates weekly losses in the 103.70 price zone, amid the persistent dollar’s weakness. The American currency suffers from coronavirus-related jitters, as more US states impose restrictive measures to curb the spread of the virus.

Late Thursday, US Treasury Secretary Steven Mnuchin sent a letter to Fed’s chair Jerome Powell, asking to return unused funds from five emergency programs. It’s unclear what’s behind such a decision, particularly considering that the Federal Reserve has been calling for additional support for the economy. Mnuchin claims that Congress would then be able to use the money for other purposes.

Japan published at the beginning of the day the October National inflation, which came in worse than anticipated at -0.4% YoY. The core CPI matched expectations printing -0.7% YoY. The country also released the November preliminary Jibun Bank Manufacturing PMI that contracted to 48.3 from 48.7. The US won’t publish macroeconomic data this Friday.

USD/JPY short-term technical outlook

The risk for the USD/JPY pair is on the downside. The 4-hour chart shows that the pair continues trading below a firmly bearish 20 SMA, which extended its decline below the larger ones. Technical indicators lack directional strength, holding within negative levels. The immediate support level is 103.50, with a break below it exposing the monthly low at 103.17.

Support levels: 103.50 103.15 102.80

Resistance levels: 104.00 104.30 104.75

View Live Chart for the USD/JPY

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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 remains bid, focus stays on 1.1900

EUR/USD has broken its two-day run of losses and is ticking modestly higher on Thursday, hovering around the 1.1880 area as the US Dollar struggles to find clear direction. Weekly Initial Jobless Claims rose more than expected, taking a bit of shine off the Greenback, but markets are largely in wait-and-see mode ahead of Friday’s US CPI release.

GBP/USD sticks to the bid bias, still below 1.3700

GBP/USD is trading with decent gains around 1.3650 on Thursday. Indeed, Cable is attempting to shake off the weakness seen earlier in the week amid another choppy session for the Greenback, while a run of disappointing UK data has so far failed to derail the pair’s tentative recovery.

Gold recedes slightly, trades below $5,100

Gold remains stuck in choppy trade on Thursday, deflating marginally just below the $5,100 mark per troy ounce as the US Dollar drifts without a clear trend. Softer US Treasury yields across the curve are offering some support, but with markets treading carefully ahead of Friday’s US CPI release, conviction remains limited and price action continues to look hesitant.