USD/JPY Forecast: Following equities in their way down

Valeria Bednarik FXStreet

USD/JPY Current Price: 108.92

US indexes fell on profit-taking, dragging the pair lower.
Japan heading into an extended holiday, back to business next Friday.
USD/JPY bearish after falling below the 109.00 mark.

The USD/JPY pair has fallen to 108.76, its lowest since December 12, ending the day just below the 108.90 level. The pair was down on dollar’s weakness throughout the first half of the day, accelerating its slump with Wall Street’s opening, as US indexes were sharply down. US Treasury yields, however, surged in quiet trading, with the yield on the benchmark 10-year note peaking at 1.94%. The yield curve is widening, as fears of a US recession eased, which means that the current greenback’s decline could be considered seasonal, with the market set to experience some wild moves post-holidays.

Japan didn’t release macroeconomic data at the beginning of the week, and local markets will be closed on holidays until next Friday. Most Asian markets will be closed amid the year-end holiday.

USD/JPY short-term technical outlook

The USD/JPY pair is bearish, according to the 4-hour chart, as the pair is comfortable below all of its moving averages, and with the 20 SMA accelerating south above the larger ones. Technical indicators, in the meantime, continue heading south despite being in oversold levels, favoring additional declines, mainly on a break below 108.60, now the immediate support.

Support levels: 108.60 108.20 107.90

Resistance levels 109.10 109.40 109.75

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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