USD/JPY Current price: 108.93
- Equities are under pressure ahead of Powell and after a disappointing Trump’s speech.
- US inflation seen posting a modest advance in October, steady at 2.4% YoY.
- USD/JPY at weekly lows, decline to steepen on a break below 108.65.
The USD/JPY pair is pressuring weekly lows around 108.90, as demand for safety increased ahead of the US Federal Reserve’s chief Powell testimony before the Congress. Also, US President Trump, who spoke in the Economic Club of New York Tuesday, failed to bring relief to markets. He centred his speech on economic growth, criticising the Fed and menacing to add more levies on Chinese imports if a deal isn’t reached.
Stocks’ markets are firmly lower in Asia and Europe, while renewed demand for government debt pushed Treasury yields to weekly lows. On the data front, Japan released the October Producer Price Index, which declined by 0.4% when compared to a year earlier. For the month, prices at factory levels were up by 1.1%, below the market’s expectations.
Later today, the US will release October CPI data. Core monthly inflation is expected at 0.2% while, when compared to a year earlier, it is foreseen at 2.4%. There are a couple of Fed’s speakers scheduled through the American afternoon, but no doubts, Powell testimony will be the star of the day, as he is expected to explain to a special commission why the Fed decides as it does.
USD/JPY short-term technical outlook
The USD/JPY pair is offering a neutral-to-bearish perspective in the short-term, as, in the 4-hour chart, the price remains below its 20 SMA, which slowly grinds lower, but above the 100 and 200 SMA. Technical indicators remain within negative levels, although without directional strength. With the pair at the current level, the net relevant support comes at 108.65, with a break below it opening the door for a steeper slide.
Support levels: 108.90 108.65 108.20
Resistance levels: 109.35 109.60 110.00
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