USD/JPY Forecast: Neutral, bullish potential limited despite dollar’s strength

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.66

US Treasury yields fell to multi-week lows amid soaring unemployment claims in the country.
Japan to release data from February, anyway expected to show signs of contraction.
USD/JPY short-term neutral, bearish case firmer only once below 106.95.

The USD/JPY has advanced early Thursday but spent most of the last daily session hovering around the 107.60 price zone. Renewed demand for the greenback resulted in USD/JPY reaching a daily high fo 108.07 during the European session. Wall Street managed to recover some ground, but the indexes traded mixed. Meanwhile, US Treasury yields extended their slump, capping advances during the American afternoon. The yield on the benchmark 10-year Treasury note fell to 0.59% after the US reported 5.2 million Americans filed for unemployment benefits.

Japan will release this Friday, February Industrial Production, seen up by 0.4% monthly basis. Capacity Utilization in the same month is seen down by 0.8%. The country will also publish the Tertiary Industry Index, seen down by 0.5% in the month.

USD/JPY short-term technical outlook

The USD/JPY pair has turned neutral in the short-term as its stuck around a Fibonacci level, the 38.2% retracement of its latest daily advance. In the 4-hour chart, technical indicators hover directionless around their midlines, while moving averages turned marginally lower, with the price stuck around its 20 and 200 SMA. Bears could take over the pair on a break below 106.95, where the pair bottomed this week.

Support levels: 107.30 106.95 106.50

Resistance levels: 108.10 108.50 108.85

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.

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