USD/JPY Current price: 111.23
Risk-averse sentiment returned following OPEC's announcement of extending its output cut for nine months, disappointing investors and sending the commodity plunging, dragging equities alongside and boosting safe-haven yen. The Asian currency got additional support overnight from better-than-expected local inflation figures, as core inflation rose 0.3% in April from a year earlier, a two-year high, on the back of rising energy costs. Mixed US data helped the pair to bounce, as US Q1 GDP was revised higher to 1.2% from the initial estimate of 0.7% and the forecasted 0.9%. April Durable Goods Orders came also above expected, falling just by 0.7% against expectations of a 1.4% decline, although the core reading was worst-than-expected, down by 0.4% against expectations of a 0.4% advance. The recovery however, was not enough to trim daily losses, with the pair still in the red and hovering around the 50% retracement of its latest daily advance around 111.20. The 4 hours chart shows that technical indicators have managed to bounce some from near oversold readings, but also that the price is below a horizontal 200 SMA a few pips above the current high, and far below the 100 SMA, maintaining the risk towards the downside. The pair bottomed at 110.85, with a break below it favoring an approach to the 110.00 region, while the upside will likely remain capped by selling interest around 111.60.
Support levels: 110.85 110.50 110.10
Resistance levels: 111.60 112.05 112.45
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