USD/JPY Forecast: Risk-on limits declines

Valeria Bednarik FXStreet

USD/JPY Current price: 109.84

Markets are on risk-on mode after the Fed show no rush to taper.
The US will publish Q2 Gross Domestic Product, seen at 8.6%.
USD/JPY consolidates losses below 110.00 could fall further.

The USD/JPY pair consolidates around 109.80 in the Fed’s aftermaths. The greenback weakens across the board, although the solid performance of global indexes prevents the JPY from appreciating. The US central bank left rates and the massive stimulus programs unchanged and repeated that heating inflation would likely be temporary. On tapering, Chairman Jerome Powell made it clear that they are in no rush to retrieve monetary support.

Asian and European indexes are firmly up, boosting US futures. Government bond yields, in the meantime, hover around their Wednesday’s closing levels, with the yield on the 10-year US Treasury note stable at around 1.26%.

The focus now shifts to the US and the release of the preliminary estimate of Q2 Gross Domestic Product. The economy is expected to have grown at an annualized pace of 8.6%, following 6.4% in the first country. The positive headline could be overshadowed by the record coronavirus contagions in the country and some restrictive measures imposed as a result.

USD/JPY short-term technical outlook

The USD/JPY pair is neutral-to-bearish according to intraday readings. The 4-hour chart shows that the pair remains below all of its moving averages, with the 20 SMA accelerating south below the longer ones. Technical indicators lack directional strength within negative levels. Chances of a directional movement are limited, although the decline could accelerate on a break below 109.57, the weekly low.

Support levels: 109.55 109.10 108.70

Resistance levels: 110.10 110.45 110.90

View Live Chart for the USD/JPY

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.