USD/JPY Forecast: Demand for safety boosts the yen

Valeria Bednarik FXStreet

USD/JPY Current price: 109.74

Japan's June Corporate Service Price Index beat expectations by printing at 1.4% YoY.
US Treasury yields fell amid investors rushing into safety ahead of the Fed.
USD/JPY has lost the 110.00 level, could keep falling in the near-term.

The USD/JPY pair broke lower on Tuesday, posting an intraday low of 109.57 to finish the day around 109.70. The pair was under selling pressure all day, accelerating its decline after the release of tepid US macroeconomic data. Also, US government bond yields edged lower, with that on the 10-year Treasury note falling to 1.229%.

Japan published the June Corporate Service Price Index, which beat expectations by printing at 1.4% YoY. Bank of Japan Governor Haruhiko Kuroda was on the wires, and he said that targeting 2% inflation has resulted in Japan no longer being in deflation, although his comments passed unnoticed. On Wednesday, the country will publish the May Leading Economic Index previously estimated at 102.6.

USD/JPY short-term technical outlook

The USD/JPY pair has room to extend its decline in the near-term. The 4-hour chart shows that it has accelerated south below all of its moving averages, with the 20 SMA turning lower between the longer ones. Technical indicators reached oversold readings, holding nearby as the American session comes to an end, suggesting persistent selling interest.

Support levels: 109.55 109.20 108.70

Resistance levels: 109.80 110.25 110.70

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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