USD/JPY Forecast: Sour sentiment weighs on the pair

Valeria Bednarik FXStreet

USD/JPY Current price: 106.76

Mounting tensions between the US and China undermine the market’s mood.
US Factory Orders are seen plummeting by 9.8% in March.
USD/JPY neutral-to-bearish could accelerate its decline below 106.35.

After gaping lower at the weekly opening, the USD/JPY pair stabilised in the 106.70 where it trades in the ongoing European session. Markets are in risk-off mood as US President Trump keeps escalating his attack on China. Over the weekend, he declared that there’s strong evidence that the coronavirus originated in a Wuhan lab, while also complained about China not compiling with the trade deal, menacing to cancel it.

Japan didn’t release macroeconomic data, as the country celebrated a local holiday. The US session will bring the ISM-NY Business Conditions index for April, previously at 12.9, and March Factory Orders, seen down in the month by 9.8%.

USD/JPY short-term technical outlook

The USD/JPY pair is neutral-to-bearish, according to its 4-hour chart, as is struggling around a directionless 20 SMA but below firmly bearish 100 and 200 SMA. Technical indicators in the mentioned chart hover around their midlines, lacking directional strength. Chances of a clear directional move are limited in a risk-averse environment, although the decline could gain strength on a break below 106.35 last week’s low.

Support levels: 106.35 106.00 105.65

Resistance levels: 106.95 107.30 107.70

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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