USD/JPY Forecast: Holding on to gains near January’s high
USD/JPY Current price: 104.23
- Risk aversion continues to fuel the greenback’s demand even against safe-havens.
- Japan’s Large Retail Sales contracted by 3.5% in December.
- USD/JPY has room to extend its advance, mainly on a break above 104.40.
The American dollar remains strong across the FX board as risk-off prevails. USD/JPY trades around 104.20, not far from this January high at 104.39, as stocks are a sea of red in Asia and Europe, following Wall Street’s collapse. A combination of dismal US data, a conservative Fed, and concerns about dollar’s weakness driving rivals too high was behind the run to safety.
Japan released at the beginning of the day December Retail Trade, which was down 0.3% YoY, slightly better than expected. Large Retailer Sales for the same month came in at -3.5%, from -3.4% in the previous month. The focus shifts now to the first release of the US Q4 Gross Domestic Product. The economy is expected to have grown at an annual pace of 3.9%, down from 33.4% in the previous quarter.
USD/JPY short-term technical outlook
The USD/JPY pair retreats from a daily high at 104.37, but overall, the risk remains skewed to the upside. The 4-hour chart shows that it has advanced beyond its moving averages, which slowly gain directional strength. Technical indicators are retreating just modestly from near overbought readings, although they are far from signaling an upcoming decline. Further gains are to be expected on a break above 104.40, the immediate resistance level, while bulls will likely be discouraged if the pair losses the 104.00 level.
Support levels: 104.00 103.70 103.25
Resistance levels: 104.40 104.80 105.15
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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.
