USD/JPY Current price: 103.66
- Poor macroeconomic data and coronavirus-related concerns weigh on the market’s mood.
- Japanese National inflation contracted by 1.2% YoY in December.
- USD/JPY is technically neutral, bullish only beyond 104.40.
The USD/JPY pair is trading around 103.60, modestly up for the day, as the dollar is grabbing some attention. The market’s mood turned sour, with equities under strong selling pressure and US Treasury yields ticking lower in pre-opening trading. It doesn’t seem to be a clear catalyst behind the U-turn in sentiment, although poor UK Retail Sales figures and mixed growth data coming from the EU exacerbate the dismal sentiment in the current London session. Also, concerns about lockdown extensions and tighter restrictive measures weigh on the sentiment.
Japanese data published at the beginning of the day resulted mixed. December National inflation worsened from -0.9% to -1.2% YoY, slightly better than anticipated. The core reading which excludes fresh food prices, printed at -1%. The preliminary estimate of the January Jibun Bank Manufacturing PMI contracted to 49.7 from 50 in the previous month, missing expectations of 50.5. The US will publish today December Existing Home Sales, and Markit preliminary estimates of manufacturing and services output.
USD/JPY short-term technical outlook
The USD/JPY pair is trading just below the 38.2% retracement of its January’s rally, after flirting with the 61.8% retracement earlier in the week. The 4-hour chart shows that the price is developing between directionless moving averages, while technical indicators advance within negative levels. The bullish potential is limited as long as the pair remains below the 104.30/40 price zone, while the risk of a steeper decline would increase on a break below 103.25.
Support levels: 103.25 102.90 102.55
Resistance levels: 104.05 104.40 104.80
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