USD/JPY Forecast: Further advances not clear yet

Valeria Bednarik FXStreet

USD/JPY Current Price: 109.14

A better market mood helped the pair recover the 109.00 mark.
BOJ Summary of Opinions and Japan’s Consumer Confidence coming up next.
USD/JPY would turn short-term bullish on a bullish extension above 109.30.

The USD/JPY pair recovered some ground in the last trading session of the day, reaching a fresh weekly high of 109.19 and settling not far below this last. The dollar retained its dominant strength, while the Japanese currency eased on the back of an improved market mood. After Asian and European equities struggled around their opening levels, finishing the day mixed, Wall Street posted substantial gains, with the Dow up over 200 points. Government bond yields stated the day falling to fresh multi-week lows, although later recovered to close in the green. The yield on the benchmark 10-year Treasury note recovered from 1.57% to settle at around 1.64%.

Japan published this Tuesday the December Corporate Service Price Index, which came in at 2.1% YoY, matching the market’s forecast. During the upcoming Asian session, the BOJ will release the Summary of Opinions, while later in the day, the country will publish the January Consumer Confidence Index, foreseen at 40.8 from the previous 39.1.

USD/JPY short-term technical outlook

The USD/JPY pair s trading around 109.10, with further gains unclear at this point, as the 4-hour chart shows that sellers surged on a test of a bearish 20 SMA, which continues heading south below the larger ones. Technical indicators, in the meantime, have recovered from their daily lows, but lost strength upward well below their midlines. The pair would need to extend its recovery beyond 109.30, a Fibonacci resistance and where it left on Friday, to be able to continue advancing toward the 110.00 figure.

Support levels: 108.90 108.65 108.20

Resistance levels: 109.30 109.75 110.05

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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