USD/JPY Forecast: Underpinned by stimulus hopes

Valeria Bednarik FXStreet

USD/JPY Current price: 104.22

Risk sentiment improved, USD/JPY advances alongside US Treasury yields.
Japanese data beat expectations but contracted from previous readings.
USD/JPY is technically bullish but still needs to surpass the 104.50 price zone.

The USD/JPY pair consolidates weekly gains in the 104.20 price zone, underpinned by the continued advance in US Treasury yields. Hopes for additional fiscal stimulus play against safe-haven government bonds, while also provide support to high-yielding equities. Markets are moving beyond political turmoil in the US, as House Democrats introduced an impeachment article against US President Donald Trump. Meanwhile, the greenback eases unevenly against most major rivals.

Data wise, Japan published the November Trade Balance, which posted a surplus of ¥616.1 billion, below the previous ¥971.1 billion. The Eco Watchers Survey on current business conditions came in at 35.5, beating expectations although below the previous 45.6. The US session will bring a couple of Fed’s speakers and some minor optimism indexes.

USD/JPY short-term technical outlook

The USD/JPY pair retains its bullish potential in the near-term, although it still needs to run past a descendant trend line coming from March 2020 in the 104.50 price zone. The 4-hour chart shows that the Momentum stabilized above its 100 level while the RSI consolidates around 64. The pair develops above all of its moving averages, with the 20 SMA heading firmly higher above the longer ones, currently around 103.90.

Support levels: 103.85 103.50 103.15

Resistance levels: 104.50 104.90 105.30

View Live Chart for the USD/JPY

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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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