USD/JPY: modest bounce on upbeat US data, still bearish

USD/JPY Current price: 110.59

The USD/JPY pair fell down to 110.23 early European morning, as risk aversion continued dominating the financial world, prompting demand for the safe-haven currency. Backing the Asian currency was a positive surprise from Japanese GDP as the world's third largest economy expanded 2.2% in the first quarter, according to the preliminary estimate, confirming the economy is recovering at a nice pace. An intraday bounce was contained by selling interest around 110.80, with the pair holding below it, but bouncing modestly after the release of US positive data.

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For the week ended May 12th, unemployment claims were of 232K, much better than the 240K expected and below previous unrevised 236K, while the Philadelphia Fed Manufacturing survey for March jumped to 38.8 from previous 22.0, also beating expectations of 19.5. The good news were not enough to fuel a strong recovery in the pair as risk aversion persists, and further declines in equities will likely result in the pair resuming its decline. In the 4 hours chart, the price remains well below its moving averages, with the 200 SMA around 111.20 capping the advance at the beginning of the day, and technical indicators barely bouncing within extreme oversold readings, all of which maintains the risk towards the downside. The 38.2% retracement of the November/December rally stands at 109.90, with a break below most likely  fueling the bearish momentum.

Support levels: 110.25 109.90 109.50

Resistance levels: 110.80 111.20 111.60

View Live Chart for the USD/JPY

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