USD/JPY Forecast: Unable to retain gains beyond 109.00

Valeria Bednarik FXStreet

USD/JPY Current Price: 108.85

Equities continued to run while yields extend gains, yet USD/JPY remained range-bound.
Japan declared a one-month emergency for Tokyo and its surrounding regions.
USD/JPY losing bullish momentum, barely holding above 108.70 support.

The USD/JPY has spent the day ranging around the 109.00 figure, unable to attract investors. The market’s mood continued to improve amid mildly positive signs related to the coronavirus pandemic, which led to substantial gains in global equities, while also lifted government bond yields. The pair traded between 108.66 and 109.27 to finally settle just below 109.00. Equities rallies paused during the American session, with US indexes retreating from highs, but holding on to most intraday gains. The yield of the 10-year US Treasury note peaked at 0.79% to end the day around 0.76%.

At the beginning of the day, Japanese Prime Minister Shinzo Abe declared a one-month emergency for Tokyo and its surrounding regions, amid a surge in the number of coronavirus cases in the area. He later explained that he aims to reduce the numbers of people in workplaces by 70%, although essential services will operate as usual. This Wednesday, Japan will release some February machine-related data, and the March Eco Watchers Survey, with the Outlook seen improving to 38.1 from 24.6 previous.

USD/JPY short-term technical outlook

The USD/JPY pair has held to the upper end of Monday’s range, but below the 23.6% retracement of its March’s advance at 109.20. The pair is in a consolidative phase, although losing its bullish potential. The 4-hour chart shows that it is barely holding above its moving averages, which remain confined to a tight range. Technical indicators ease within positive levels, approaching their mid-lines. The risk of a downward move will increase on a break below the 108.70 level, the immediate support.

Support levels: 108.70 108.25 107.90

Resistance levels: 109.20 109.60 110.05

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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