USD/JPY Forecast: Dollar’s negative momentum accelerates

Valeria Bednarik FXStreet

USD/JPY Current price: 105.37

Japan´s January National inflation came in at -0.6% YoY.
US Treasury yields are back near one-year highs, but market players ignore them.
USD/JPY gains bearish traction in the near-term, could lose the 105.00 level.

The American dollar entered a sell-off spiral with London opening, falling sharply against all of its major rivals. The USD/JPY pair trimmed a good bunch of its weekly gains, now trading around 105.40. The better tone of equities reflects resurgent optimism about US stimulus and progress towards an economic comeback. Meanwhile, US Treasury yields recover ground, flirting with their recent yearly highs, but not enough to shoot dollar’s demand as it happened these days.

Japan published the January National inflation, which came in at -0.6% YoY, while the core reading also printed at -0.6%, better than expected. The country released the Jibun Bank Manufacturing PMI, which improved in February to 50.6, according to preliminary estimates. The US session will include the preliminary estimates of the Markit PMIs.

USD/JPY short-term technical outlook

The USD/JPY pair is poised to extend its decline, trading near its daily low. The 4-hour chart shows that the pair has broken below its 20 SMA, although the longer ones maintain their bullish slopes below it. Technical indicators head south near oversold readings without signs of bearish exhaustion.

Support levels: 105.30 104.95 104.50

Resistance levels: 105.60 105.95 106.30

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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