USD/JPY Forecast: Correction underway, eyes on 106.50

Valeria Bednarik FXStreet

USD/JPY Current price: 106.72

Japan’s unemployment rate held steady at 2.9% in January.
Easing US Treasury yields put a cap to USD/JPY advance.
USD/JPY retreated just modestly from fresh 2021 highs, still has room on the upside.

The USD/JPY pair hit 106.95, a fresh 2021 high, but retreated from the level during US trading hours, ending the day with modest losses around 106.70. The poor performance of equities and easing US Treasury yields weighed on the pair, which anyway retains its bullish potential.

Data wise, Japan published the January Unemployment rate, which remained at 2.9% against expectations of an uptick to 3%. The February Monetary Base was up 19.6%, missing the 20.1% forecast. The country will publish the February Jibun Bank Services PMI, previously at 46.1.

USD/JPY short-term technical outlook

The USD/JPY pair has retreated after posting higher highs for a sixth consecutive day. The decline seems limited at the time being, as the pair trades above the 23.6% retracement of its latest daily at 106.47. In the 4-hour chart, the pair holds well above a firmly bullish 20 SMA, which remains well above the longer ones. The RSI indicator stabilized around 59, while the Momentum indicator resumes its advance within positive levels, indicating limited selling interest.

Support levels: 106.50 106.15 105.70

Resistance levels: 106.95 107.30 107.65

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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