USD/JPY: set to resume its decline

USD/JPY Current price: 111.62

  • USD/JPY bounced, but the risk remains toward the downside.
  • US Treasury yields will set the tone once again today.

Easing US Treasury yields have helped the USD/JPY bounce some, but the pair remains well below the 112.00 figure, with the recovery seen as a correction after yesterday's sharp slide. The USD/JPY pair recovered up to 111.87 during the Asian session but stands around the 111.60 resistance area ahead of US opening and data. Japanese data released overnight were quite encouraging, as the leading index hit its strongest level in almost four years in November, up to 108.5 from October 106.5. The coincident index surged to 118.1 from 116.4 in the same month. Yields retreated after peaking at multi-month highs but hold well above their weekly opening levels, limiting the downside in the pair at the time being.

Ahead of US macroeconomic releases, the pair remains biased lower according to technical readings in the 4 hours chart and despite the latest recovery, as the price remains far below its 100 and 200 SMAs, with the shortest slowly gaining traction downward. In the same chart, technical indicators lost upward strength after correction oversold conditions, now turning modestly lower well below their mid-lines. Additional declines should be expected below 111.20, towards the 110.80 price zone, where the pair bottomed last November, while below this last, an approach to the 110.00 figure will be on the table.

Support levels: 111.20 110.85 110.50

Resistance levels: 112.00 112.40 112.75

View Live Chart for the USD/JPY

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