USD/JPY Forecast: Pressure remains despite improving mood

Valeria Bednarik FXStreet

USD/JPY Current price: 105.47

Japan´s Merchandise Trade Balance is foreseen at ¥-37.5 B in August from ¥10.9 B previously.
US Treasury yields ticked higher as investors wait for the US Federal Reserve.
USD/JPY is at risk of extending its slump after reaching fresh September lows.

The USD/JPY pair extended its weekly decline to 105.29, a fresh September low, recovering some ground ahead of the close, amid rising equities and US government bond yields. Nevertheless, the pair is clearly reflecting the lack of interest in the greenback, ahead of the US Federal Reserve monetary policy decision. The dollar remained under selling pressure despite a better market mood, this last backed by upbeat Chinese data. US indexes traded in the green throughout the session, advancing for a second consecutive day. US Treasury yields, in the meantime, ticked higher.

Japan will publish this Wednesday the August Merchandise Trade Balance, foreseen at ¥-37.5 B from ¥10.9 B in the previous month. Imports are expected to have dropped 18% while exports are seen down by 16.1%.

USD/JPY short-term technical outlook

The USD/JPY pair is trading around the 105.50 level, and still at risk of falling, according to the 4-hour chart. The pair fell further below all of its moving averages, with the 20 SMA accelerating south below the larger ones. Technical indicators, in the meantime, have barely bounced from their daily lows, lacking enough strength to anticipate a recovery.

Support levels: 105.10 104.70 104.40

Resistance levels: 106.00 106.35 106.70

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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