USD/JPY Forecast: Giving up to risk aversion
USD/JPY Current price: 108.43
- The echoes of Turkey turmoil continue to weigh on financial markets.
- All eyes are on US Federal Reserve chief Jerome Powell´s testimony.
- USD/JPY broke lower and is set to extend its decline in the near-term.
The USD/JPY pair trades at a fresh two week low amid the ruling risk aversion. Stocks are down, as well as US government bond yields as investors run for safety. The greenback is sharply up against high-yielding rivals, although also down against safe-haven gold. The catalyst continues to be Turkey as local markets are in sell-off mode, weighing on their European counterparts.
Japan macroeconomic calendar remained empty, with the focus now shifting to US Federal Reserve chief Jerome Powell. Powell and Treasury Secretary Janet Yellen are due to testify on the CARES Act report. The prepared remarks have already been published, showing that, while the economic recovery is faster than anticipated, it is far from complete. Employment is a major concern as the Fed will “not lose sight of the millions of Americans who are still hurting.”
USD/JPY short-term technical outlook
The USD/JPY pair trades at daily lows and is poised to extend its slump. In the 4-hour chart, the pair has accelerated its decline below a mildly bearish 20 SMA and approaching a bullish 100 SMA for the first time in a month. Technical indicators turned south, maintaining their bearish slopes within negative levels. A steeper decline could be expected on a break below 108.40, the immediate support.
Support levels: 108.40 108.05 107.70
Resistance levels: 109.00 109.40 109.85
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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.
