USD/JPY Forecast: Underpinned by stocks and yields

Valeria Bednarik FXStreet

USD/JPY Current price: 110.52

Wall Street posted all-time closes on Friday, lifting USD/JPY.
Japan returns from a long weekend with the release of the Jibun Bank Manufacturing PMI.
USD/JPY has room to extend its advance but needs additional technical confirmation.

The USD/JPY pair peaked at 110.58, its highest for the week, ending it nearby. The pair traded alongside government bond yields, bottoming at 109.72 as the yield of the 10-year US Treasury note plummeted to 1.12% and recovering as the latter settled near 1.30%. Also, Wall Street closed at all-time highs on the back of solid earnings, providing additional support to USD/JPY.

Japan returns from a long weekend on Monday and will publish the flash Jibun Bank Manufacturing PMI, foreseen in July at 52.3 from 52.4 in the previous month.

USD/JPY short-term technical outlook

The USD/JPY pair could extend its advance, but additional confirmations are required. The daily chart shows that it settled above a flat 20 SMA, while the longer ones maintain their bullish slopes below the current level. Technical indicators advanced, although the Momentum remains below its 100 level. In the 4-hour chart, the pair settled above all of its moving averages, with the 20 SMA heading firmly up but below the longer ones. Finally, the Momentum indicator retreats within positive levels, while the RSI consolidates around 65. The pair needs to break above 110.69, July 14 high, to confirm a bullish extension ahead.

Support levels: 110.25 109.80 109.40

Resistance levels: 110.70 111.10 111.50

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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