USD/JPY Forecast: Trading near monthly highs

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.73

The Bank of Japan will have an unscheduled meeting this Friday.
Industrial-related data in Japan continues to indicate a recession is coming to the country.
USD/JPY retreated from a fresh 1-month high, remains biased higher.

The USD/JPY pair hit a 5-week high of 108.08, retreating from the level but holding on to intraday gains. The pair jumped after the Bank of Japan called for an unscheduled monetary policy meeting on May 22, meant to discuss new measures to support small and medium business. The pair lost momentum as US Treasury yields eased from early highs and as Wall Street struggled to trade in the green.

Earlier in the day, Japan released March Industrial Production, which fell by 3.7% MoM and by 5.2% when compared to a year earlier, meeting the market’s expectations. Capacity Utilization in the same month contracted 3.6% worse than anticipated. The figures support fears about a steeper economic contraction in the country. This Wednesday, Japan will publish March Machinery Orders, seen contracting sharply from the previous month.

USD/JPY short-term technical outlook

The USD/JPY pair maintains its positive technical stance. In the 4-hour chart, it finally broke above its 200 SMA, while the 20 SMA continues to advance just below the larger one. The Momentum indicator heads higher nearing overbought readings, while the RSI eases from overbought levels, currently at around 64. The pair will retain its positive tone as long as it holds above 107.30, the immediate support.

Support levels: 107.30 106.90 106.65

Resistance levels: 108.00 108.40 108.80

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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