USD/JPY Forecast: Sellers around 109.00 continue to cap advances

Valeria Bednarik FXStreet

USD/JPY Current Price: 108.56

The Japanese yen closed the week with gains despite upbeat US data released Friday.
Japan’s Gross Domestic Product seen up by 0.2% in the three months to September.
USD/JPY technically bearish amid persistent concerns about the US-China trade relationship.

The USD/JPY pair settled around its weekly low in the 108.50 price zone, resuming its decline on Friday after hitting a daily high of 108.92 post-NFP. The US upbeat US employment report triggered a nice intraday bounce, but bulls gave up as the pair was unable to recover the 109.00 threshold. The Japanese yen appreciated in spite of substantial gains in Wall Street, and a jump in Treasury yields, with the yield on the benchmark 10-year note ending the week at 1.84%.

Meanwhile, the market remains concerned about the developments in the trade war front. US President Trump said on Thursday that the two economies are moving closer to a trade deal, but beyond comments, there were no material signs of progress. The US is scheduled to apply more tariffs on China next December 15, and the market fears that, if phase one of a trade deal is not signed this week, the trade war will escalate further, affecting the global economy.

After the weekly opening, Japan will release its Q3 Gross Domestic Product, with the economy foreseen growing 0.2% in the three months to September. Annualized growth is foreseen at 0.7% up from 0.2% in the previous quarter. The country will also release its October Trade Balance and the November Eco Watchers Survey.

USD/JPY short-term technical outlook

The daily chart for the USD/JPY pair skews the risk to the downside, as it is trading below its 20 and 200 DMA, both converging around the weekly high around 109.00, while technical indicators offer neutral-to-bearish slopes just below their midlines. In the shorter term, and according to the 4-hour chart, the pair has settled below all of its moving averages, with the 20 SMA heading south below the larger ones. Technical indicators, in the meantime, lack directional strength but remain within negative levels. Further declines are to be expected on a break below 108.40, the immediate support.

Support levels: 108.40 108.10 107.75

Resistance levels: 109.00 109.30 109.60

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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