USD/JPY Forecast: Retreating from critical resistance

Valeria Bednarik FXStreet

USD/JPY Current Price: 109.50

Softer-than-expected US employment report helped the yen recover some ground.
Japan data mixed, continues to indicate moderated economic growth.
USD/JPY easing, but bearish potential limited, according to intraday technical readings.

The dollar rallied against the JPY throughout the week but was unable to take the 109.70 price zone, where sellers have been aligned since last December, ending Friday little changed around 109.50. The USD/JPY pair traded as high as 109.68, as risk-appetite weighed on the safe-haven yen. Japanese data released at the beginning of the day came in mixed, at November Overall Household Spending, which declined by 2.0%, well below the 2.5% advance expected. The preliminary estimate for the Leading Economic Index for the same month, beat expectations by printing at 90.9, while the Coincident Index came in at 95.1, also above the market’s forecast.

The rally stalled after a softer-than-anticipated US employment report, which led to some losses in Wall Street, and also to a retracement in US government debt yields. The yield on the benchmark 10-year note finished the week at 1.82 after peaking mid-week at 1.87%. Japan will kick-start the week with a holiday, which means there won’t be macroeconomic releases.

USD/JPY short-term technical outlook

The USD/JPY pair’s bullish stance persists, although it’s losing momentum. In the daily chart, the pair is still above all of its moving averages, while the Momentum indicator is barely entering positive levels and the RSI turning lower, currently at around 57. In the shorter term, and according to the 4-hour chart, the bearish potential is limited, as technical indicators are easing from extreme overbought levels, while the pair develops above all of its moving averages. A firmly bullish 20 SMA is crossing above the larger ones. The pair could turn bearish once below 108.90 a critical Fibonacci support level.

Support levels: 109.25 108.90 108.50

Resistance levels: 109.70 110.00 110.40

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.