USD/JPY Price Forecast: A move to 110.00 is not ruled out

USD/JPY corrects lower following monthly peaks.
Price action in the pair keeps looking to US yields.
Focus of attention will once again be on the US docket.

Pablo Piovano FXStreet

USD/JPY embarks into a gradual correction lower after hitting monthly highs near 109.80 in past hours.

The unexpected pick-up in US inflation figures during April put further upside pressure to US yields, lifting the 10-year benchmark to the 1.70% neighbourhood. The dollar followed suit as well as the selling bias in the Japanese safe haven, all collaborating with the upside in spot eventually.

In the meantime, the performance of the US economy continues to be in the centre of the debate among investors. Indeed, upcoming data is expected to shed extra details on the US recovery, with yields and price action in the dollar closely following.

In the US docket, US Retail Sales will be in the limelight seconded by Industrial Production figures and the flash prints of the U-Mich index.

Short-term Outlook

The continuation of the downtrend is seen meeting interim contention at the 50-day SMA just above 109.00. This area of contention is also reinforced by the Fibo level (of the 2021 rally) around 109.00. Further south comes in the monthly lows around 108.30 (May 7/11). On the upside, the surpass of monthly tops around 109.80 should open in the door to the key level at 110.00 the figure ahead of the YTD highs in levels just shy of 111.00 (March 31).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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