USD/JPY Forecast: Resurged demand for safe-haven assets

Valeria Bednarik FXStreet

USD/JPY Current price: 110.61

Japanese data beat the market’s expectations but fell short of affecting the pair.
US Treasury yields ticked lower after the long weekend, reflecting the sour mood.
USD/JPY is technically bearish and poised to test the 110.35 support.

The USD/JPY pair extends its weekly decline by a few pips, currently trading at around 110.60. The market mood is sour, with safe-haven assets appreciating against the greenback yet the latter higher against high-yielding rivals. US Treasury yields ticked lower after the long weekend, with that on the 10-year note currently around 1.42%. European stocks trade in the red, dragging Wall Street futures lower.

Japanese data beat expectations, although it had a limited impact on the pair. Labor Cash Earnings rose 1.9% YoY in May, while Overall Household Spending in the same period increased 11.6%. The US session will bring the final June Markit Services PMI and the official ISM index, this last, foreseen at 63.5, down from the previous 64.

USD/JPY short-term technical outlook

The USD/JPY pair is poised to extend its slump in the near-term. The 4-hour chart shows that the pair approaches a mildly bullish 100 SMA while the 20 SMA gains bearish strength above the current level. Technical indicators head firmly lower, approaching oversold readings yet without signs of bearish exhaustion. The immediate support level and a possible bearish target is 110.35, with a break below it, favoring a continued decline in the upcoming sessions.

Support levels: 110.35 109.90 109.50

Resistance levels: 110.80 111.20 111.65

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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