USD/JPY Forecast: Consolidative phase continues as mood deteriorates
USD/JPY Current price: 108.92
- Pandemic numbers weighed sentiment lower amid worsening figures in the US and Europe.
- FOMC Meeting Minutes from March 15 most likely to pass unnoticed.
- USD/JPY neutral in the short-term needs to break above the weekly high.
The USD/JPY pair continues to trade in a limited intraday range around the 109.00 level and just below a major Fibonacci level, the 23.6% retracement of its latest bullish run. The market has lost the positive sentiment seen earlier this week, as Wall Street ended up closing in the red on Tuesday, weighing on its overseas counterparts. Treasury yields, on the other hand, have eased just modestly with the yield on the 10-year US Treasury at 0.73% at the time being. Hopes that the world´s pandemic may be starting to recede have diminished, as the number of new cases and the death toll, both rose in some European countries. The US recorded over 1,800 fatalities in the last 24 hours, the highest death toll in a single day.
The dollar, however, remains weak. Market players will likely resume buying the greenback during US trading hours, something quite usual these days. Meanwhile, Japan released February data, which was generally encouraging, although unable to affect the price. Machinery Orders were up in the month by 2.3% while, when compared to a year earlier, decreased by 2.4%. The Current Account Balance for the same month posted a larger than expected surplus of ¥3168.8 B.
The US session will bring the Minutes of the FOMC Meeting from March 15. Chances that they have an effect on the market are quite limited, given that things are moving too fast these days and the central bank has announced unlimited QE after that particular meeting.
USD/JPY short-term technical outlook
The USD/JPY pair is trading in the 108.90 price zone, and the 4-hour chart shows that it’s struggling with the 20 SMA and the 100 SMA, both converging with the price and lacking directional strength. The 200 SMA heads marginally lower below the current level, although not far from it. Technical indicators, in the meantime, lack directional strength, the Momentum around its mid-line and the RSI at around 55, both indicating absent interest. The pair would need to advance beyond 109.38, the weekly high, to turn bullish, while the risk of a bearish extension will increase on a break below 108.25.
Support levels: 108.65 108.25 107.90
Resistance levels: 109.40 109.80 110.15
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.
