USD/JPY Forecast: Risk-aversion favors yen’s gains
USD/JPY Current price: 103.68
- A sour market’s mood favored some modest JPY gains.
- Japanese Industrial Production contracted by more than anticipated in November.
- USD/JPY is trading near a strong static support level at 103.50.
The USD/JPY pair shed some ground at the beginning of the week, ending the day in the 103.60 price zone. The poor performance of European indexes, which closed mixed and near their opening levels, reflected the dismal market’s mood. Investors maintained a cautious stance ahead of more relevant events later in the week, while they finish digesting the latest coronavirus developments. The world has surpassed 95 million cases, and it seems things will worsen before starting to get better. Choppy start to vaccine immunization undermines the sentiment.
Japanese data released this Monday indicated that Industrial Production contracted 3.9% YoY in November, missing the market’s expectations. Capacity Utilization contracted by 2.9% in the same month. The country won’t publish macroeconomic data this Tuesday.
USD/JPY short-term technical outlook
The USD/JPY pair has bottomed at 103.63 for the day, now trading just below the 38.2% retracement of its January’s advance. In the 4-hour chart, the pair is neutral-to-bearish, as the price trades between directionless moving averages, while technical indicators head lower within negative levels, although with uneven strength. The risk of a fresh leg lower will likely increase on a break below 103.50, the immediate support level.
Support levels: 103.50 103.15 102.70
Resistance levels: 104.15 104.50 104.90
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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.
