USD/JPY Forecast: Dollar has no chances against its Asian rival

Valeria Bednarik FXStreet

USD/JPY Current price: 107.90

Japanese annual inflation continued to print negative numbers in March.
Stocks remain in the red, US Treasury yields are in retreat mode.
USD/JPY trades below the 108.00 level and maintains its bearish stance.

The American currency is under selling pressure as the week comes to an end, as upbeat European data overshadows risk-averse headlines. The USD/JPY pair trades at the lower end of its monthly range and near a daily low of 107.79. And while the greenback weakens against its major rivals, US Treasury yields remain near weekly lows and equities trade in the red, all of which favors another leg lower for the pair.

Earlier in the day, Japan published March National Inflation, which decreased by 0.2% YoY, worse than anticipated. The core annual reading, which excludes fresh food prices, improved to -0.1% from the previous -0.4%. The country also published the preliminary estimate of the April Jibun Bank Manufacturing PMI, which printed at 53.3, much better than the previous 52.7.

During the American session, Markit will release the preliminary estimates of April PMIs. Manufacturing output is foreseen improving from 59.1 to 60.5, while the services index is expected at 61.5 vs the previous 60.4.

USD/JPY short-term technical outlook

From a technical point of view, the USD/JPY pair is poised to extend its slump. Trading at levels last seen in early March, the pair continues to achieve lower low daily basis. In the near-term, and according to the 4-hour chart, the pair keeps developing below its moving averages. The 20 SMA has partially lost its bearish strength, but the longer ones accelerated their slumps well above the current level. Technical indicators are directionless but within negative levels and without signs of bearish exhaustion.

Support levels: 107.65 107.20 106.90

Resistance levels: 108.20 108.50 108.90

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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