USD/JPY Forecast: Modest recovery stalled below 105.00

Valeria Bednarik FXStreet

USD/JPY Current price: 104.88

The focus remains on US stimulus talks, with progress reported by House Speaker Pelosi.
Japan´s October Jibun Bank Manufacturing PMI is foreseen at 47.3 from 47.7 previously.
USD/JPY is at risk of resuming its decline as long as it remains below 105.00.

The USD/JPY pair got to recover some ground this Thursday, amid renewed dollar’s demand and the better performance of equities. US indexes opened the day with modest losses but turned green with comments from US House Speaker Nancy Pelosi indicating that they are “just about there” on a stimulus deal with the White House. Also, higher US Treasury yields backed the pair, surging to fresh multi-week highs on stimulus optimism. The yield on the benchmark 10-year note hit 0.85% and settled not far below this last.

The Japanese macroeconomic calendar had little to offer, as the country published minor figures related to foreign investment. This Friday, the country will publish September National inflation and the preliminary estimate of the October Jibun Bank Manufacturing PMI, foreseen at 47.3 from 47.7 previously.

USD/JPY short-term technical outlook

The latest USD/JPY advance seems corrective, as the pair remained below the 105.00 level. The 4-hour chart shows that the pair continues developing below all of its moving averages, and with the 20 SMA still heading south below the larger ones. Technical indicators, in the meantime, have corrected oversold conditions, but pared their recoveries well into negative territory, and have already turned south. Overall, the risk is skewed to the downside, with further declines seen once below 104.65.

Support levels: 104.65 104.30 103.95

Resistance levels: 105.00 105.40 105.80

View Live Chart for the USD/JPY

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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.

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