USD/JPY Forecast: Under pressure but no follow-through

Valeria Bednarik FXStreet

USD/JPY Current price: 107.58

Japan’s large manufacturers´ sentiment plummeted in the first quarter of the year.
The market’s mood is sour, amid the coronavirus pandemic running out of control.
USD/JPY trading below the 38.2% retracement of its latest daily advance.

The Japanese currency is mildly stronger against its American rival, as the market’s mood took a turn to the worse. Equities are a sea of red worldwide, while demand for government bonds is sending yields lower in the US ahead of the opening. The yield on the benchmark 10-year Treasury note stands at 0.61% after falling to 0.59%. The coronavirus outbreak keeps taking its toll, with the number of cases still on the rise.

In the data front, Japan’s large manufacturers´ sentiment plummeted in the first quarter of the year, although it came in better than expected. The Tankan Large Manufacturing Index came in at -8 from 0 in the previous quarter and the -10 expected. Focus now shifts to US employment and manufacturing data, as the country will publish the ADP survey on private jobs’ creation. According to preliminary estimates, 150K positions are expected to have been lost in March. Also, the US will publish the official March ISM Manufacturing PMI, foreseen at 45 from 50.1 previously.

USD/JPY short-term technical outlook

The USD/JPY pair is trading just below the 38.2% retracement of its latest daily advance, also below all of its moving averages in the 4-hour chart. Despite the lack of follow-through, the risk is skewed to the downside, as the 20 SMA is crossing below the larger ones, while technical indicators lack directional strength, the Momentum around its mid-line and the RSI at 39. The pair keeps holding above 107.11, the weekly low and the immediate support.

Support levels: 107.10 106.80 106.35

Resistance levels: 108.00 108.35 108.70

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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