USD/JPY Forecast: Increasingly bearish after falling toward its 100 DMA

Valeria Bednarik FXStreet

USD/JPY Current Price: 108.55

The Japanese macroeconomic calendar will remain empty this Friday.
US Treasury yields edged sharply lower, dragging the pair alongside.
USD/JPY pierced December low, fell to a fresh 2-month low.

The USD/JPY pair fell to 108.20, its lowest in almost two months, weighed by falling US Treasury yields during US trading hours. Despite Wall Street continued rallying, bonds appreciated driving yields sharply lower in the first trading day of the year. The yield on the benchmark 10-year note fell to 1.85%, after peaking at 1.95% at the beginning of the day. Japan will return to business after a long holiday, but there are no macroeconomic data scheduled for release.

USD/JPY short-term technical outlook

The USD/JPY pair has bounced from the mentioned low, ending the day at around 108.50. It has neared a mild-bullish 100 DMA for the first in almost three-months and fell for a fourth consecutive day, which reflects the increasingly bearish potential. In the shorter-term, and according to the 4-hour chart, the risk is also skewed to the downside, as the pair is developing below a firmly bearish 20 SMA, which already crossed below the larger ones, as technical indicators resumed their declines within negative levels, after correcting extreme oversold conditions.

Support levels: 108.40 108.10 107.70

Resistance levels 108.90 109.30 109.70

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.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.