USD/JPY Forecast: Range trading continues as uncertainty remains high

Valeria Bednarik FXStreet

USD/JPY Current price: 107.71

Plummeting crude oil prices are leading the way at the beginning of the week.
Japan’s Trade Balance posted a modest surplus of ¥4.9 B in March as exports fell.
USD/JPY technically neutral in the short-term could advance some once above 108.10.

The USD/JPY pair peaked at 107.94 this Monday, but quickly trimmed gains to return to its comfort zone around 107.70. The financial market is being driven by oil prices collapsing to record lows amid the absence of demand in a paralyzed world. Equities advanced in Asia, but the positive momentum faded as the day went by. Global indexes turned red despite a modest bounce in the price of the commodity.

The dollar seesaws between gains and losses, led by the market’s sentiment, with major pairs confined to familiar levels and tight intraday ranges. Japan released its March Merchandise Trade Balance, which posted a surplus of ¥4.9 B, well below the expected ¥917.2 B and the previous ¥1108.8 B. Imports were down by 5% in the same month, better than the -14.4% forecast, although exports plummeted by 11.7%. The US will publish today the March Chicago Fed National Activity Index, previously at 0.16.

Meanwhile, the attention remains on the coronavirus pandemic. Mixed signs in that front, with some countries discussing how to start reopening their economies and others not yet near a peak of infections, indicating that the crisis is far from over.

USD/JPY short-term technical outlook

The USD/JPY pair is battling with the 38.2% retracement of its March rally, as it has done for most of the previous week. In the 4-hour chart, the pair offers a neutral-to-bearish perspective, as it trades within a congestion of moving averages, as technical indicators turned modestly lower within neutral levels. The pair could gather some positive momentum on a break above 108.10, although sustainable gains are unlikely during the upcoming sessions.

Support levels: 107.30 106.95 106.50

Resistance levels: 108.10 108.50 108.80

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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