USD/JPY Forecast: Modest comeback ahead of Powell’s testimony

USD/JPY Current price: 105.27

US Treasury yields ticked higher, indexes fell in pre-opening operations.
Fed’s chief Powell to testify before US Congress on monetary policy.
USD/JPY has a limited bullish potential, needs to advance beyond 105.60.

The USD/JPY pair is recovering from an intraday low of 104.92, trading around 105.30. The greenback fell throughout the Asian session but staged a modest comeback as London traders kicked in. Meanwhile, equities have lost their early momentum, with European indexes trading in the red and dragging US futures lower. Treasury yields, on the other hand, are ticking higher.

Japan celebrated a holiday this Tuesday and published no macroeconomic data. In the US, the focus will be on the Federal Reserve chief Jerome Powell, who will testify before Congress for the first time in the Biden era. The Semiannual Monetary Policy Report may include hints on the future of QE. Powell’s prepared remarks will be released ahead of his speech.

USD/JPY short-term technical outlook

The USD/JPY pair has a limited bullish scope in the near-term. The 4-hour chart shows that it recovered above a mildly bullish 100 SMA, but also that it remains below a bearish 20 SMA. Technical indicators remain within negative levels, the Momentum advancing, but the RSI flat at around 46. The advance could gather momentum if the pair surpasses the 105.60 level.

Support levels: 104.95 104.50 104.10

Resistance levels: 105.60 105.95 106.30

View Live Chart for the USD/JPY

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