USD/JPY Current price: 109.60

  • Japan’s Gross Domestic Product is expected to have improved to 0.2% QoQ in Q2.
  • US Treasury yields plunged on Friday, weighing on USD/JPY.
  • USD/JPY is poised to extend its decline on a break below 109.50.

The USD/JPY pair edged sharply lower and settled at 109.60, ending the week with losses. The pair retreated from a one-month high of 110.79 as investors dumped the greenback. The slide gained bearish momentum on Friday, as US government bond yields retreated, with the yield on the 10-year Treasury note settling at 1.28%.  Meanwhile, Wall Street managed to post modest gains, as a series of earnings reports partially offset the dismal mood. As a result, the DJIA and the S&P 500 keep posting record highs.

Japan will start the week by publishing the preliminary estimate of the second quarter Gross Domestic Product, foreseen at 0.2% QoQ from -1% in Q1. The country will also release June Industrial Production and Capacity Utilization.

USD/JPY short-term technical outlook

According to the daily chart, the USD/JPY pair is bearish. It has broken below its 20 and 100 SMAs, which anyway remain directionless, while technical indicators crossed below their midlines, maintaining their strong bearish slopes. The 4-hour chart shows that the pair plunged below all of its moving averages, with the 20 SMA turning bearish although above the longer ones. Technical indicators reached oversold conditions, with the Momentum bouncing modestly but the RSI still heading lower at around 27, skewing the risk to the downside.

 Support levels: 109.50 109.05 108.60

Resistance levels: 109.90 110.35 110.80

 View Live Chart for the USD/JPY

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