USD/JPY Forecast: Further declines likely once below 109.55
USD/JPY Current price: 109.93
- The Japanese Leading Economic Index was confirmed at 102.6 in May.
- Mixed US indexes and steady US government bond yields limited USD/JPY advances.
- USD/JPY retained the bearish tone post-Fed, trades above the weekly low.
The USD/JPY pair recovered from its weekly low at 109.57 and topped 110.28 post-Fed, as US policymakers sounded more optimistic than expected. US stocks ticked higher with the US central bank announcement, although Wall Street closed mixed. Government bond yields were also up but held within familiar levels.
Japan published the final reading of the May Leading Economic Index, which printed at 102.6 as expected. However, the Coincident Index for the same month was downwardly revised to 92.1. The Bank of Japan published the Summary of Opinions of its July, which showed that policymakers believe that the Japanese economy “has picked up as a trend, although it has remained in a severe situation due to the impact of the novel coronavirus at home and abroad.” The country won’t publish relevant data on Thursday.
USD/JPY short-term technical outlook
The USD/JPY pair trades below 110.00 as the greenback edged lower with the Federal Reserve’s event. The near-term picture is bearish, as the pair remains below all of its moving averages in the 4-hour chart, with the 20 and 100 SMA converging at around 110.15. Technical indicators have resumed their declines within negative levels, reflecting bears’ dominance. A steeper decline could be expected on a break below 109.57, the weekly low.
Support levels: 109.55 109.20 108.70
Resistance levels: 110.15 110.50 110.75
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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.
