USD/JPY Forecast: Heading toward the critical 110.00 area

Valeria Bednarik FXStreet

USD/JPY Current price: 109.38

The BOJ purchased a record high of 201.6 billion yen of Japanese stock exchange-traded funds.
Japanese National inflation rose 0.4% YoY in February, contraction from the previous 0.7%.
USD/JPY technically bullish could extend its gains toward 110.00 despite risk aversion.

The USD/JPY pair rallied overnight to 109.55, its highest since February, boosted early Asia by ECB’s announcement. The European Central Bank announced an emergency €750 billion "pandemic emergency purchase program" (PEPP) to buy private and public sector securities. The news underpinned sentiment, although temporarily, as market players are not yet done with unwinding stocks’ longs. Equities fell in Asia, while European ones struggle to post some gains, battling with opening levels.

This Thursday, the Bank of Japan purchased a record high of 201.6 billion yen of Japanese stock exchange-traded funds as part of the measures announced earlier this week to keep the economy afloat through the ongoing crisis. Japanese National inflation came in at 0.4% YoY for February, well below the previous and the expected, a sign of deepening conflicts ahead for policymakers.

The US macroeconomic calendar has little to offer today, as the country will publish the usual weekly unemployment figures and the March Philadelphia Fed Manufacturing Survey, foreseen at 10 from 36.7 previously.

USD/JPY short-term technical outlook

The USD/JPY pair has broken above the 61.8% retracement of its February/March slump at 108.00, holding on to gains as demand for the greenback overshadows yen’s safe-haven condition. The 4-hour chart shows that the pair is developing above all of its moving averages, with a directionless 200 SMA providing support at around 108.45. Technical indicators hold near overbought levels, heading north although with limited upward strength. An approach to 110.00 should be expected on a break above the mentioned daily high.

Support levels: 108.90 108.45 108.00

Resistance levels: 109.55 109.90 110.30

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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