USD/JPY Forecast: First test of 103.50 support

Valeria Bednarik FXStreet

USD/JPY Current price: 104.08

US Treasury yields managed to recover some ground in a sentiment-driven market.
US data beat expectations but still indicates a long way towards an economic comeback.
USD/JPY retains its bearish stance in the near-term, hovering around 104.00.

The USD/JPY pair is ending Monday unchanged around 104.30, recovering from a fresh December low of 103.50. The pair fell on the broad dollar’s weakness, amid an optimistic mood, and recovered with falling equities and a sour sentiment, with the market ignoring the yen’s safe-haven condition. US Treasury yields surged but trimmed part of their intraday gains during the American afternoon, limiting the upside for the pair.

On the data front, Japan published the Q4 Tankan survey, which showed that business sentiment has improved by more than anticipated, as the Large Manufacturing Index improved to -10 from -27, beating the -15 forecast. The country also reported October Industrial Production, which declined by 3% YoY, and Capacity Utilization was up 6% YoY, in line with their previous reading. Japan won’t release macroeconomic figures this Tuesday.

USD/JPY short-term technical outlook

The USD/JPY pair is still on the bearish side, according to intraday technical readings. The 4-hour chart shows that the latest advance stalled around a mildly bearish 20 SMA, which develops below the largest ones. Technical indicators recovered from oversold readings but lost their bullish strength before reaching their midlines. The pair bounced from a critical support level, with the bearish potential set to increase only on a break below 103.50.

Support levels: 103.85 103.50 103.10

Resistance levels: 104.30 104.75 105.10

View Live Chart for the USD/JPY

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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