USD/JPY bears testing critical support and bull's commitments

  • USD/JPY slid to a fresh low as the US dollar falls out of the market's favour.
  • Investors are on the hunt for yield as risk appetite improves.

USD/JPY is trading at 103.53 between the day's range of 103.32 and 103.66 following a bout of supply earlier the week.

The bulls were denied their glory at the start of the week when the market dumped the dollar for higher yielders which, invertedly, took the yen along for the ride.

The yen continues to be supported on an under-belly of risk-off themes and catches a bid when the dollar falls out of the market's favour. 

Sentiment for the dollar is related to fiscal spending but we had some good US data this morning. 

Treasury yields were mostly higher and the yield curve steepened after US labour market data showed new claims for jobless benefits declined modestly last week.

There were also upbeat housing starts data and a higher factory index for the mid-Atlantic region.

We're also hearing relatively positive, or maybe even borderline hawkish comments from global central bank officials of late following yesterday's Bank of Canada and today's European Central Bank. 

Such rhetoric would be expected to weigh on the greenback as investors bank on a faster global economic recovery, not just in the US. 

Meanwhile, Asian stocks reached new highs overnight which has helped Wall Street to ride further.

MSCI's global index of stock performance across 50 countries IACWI gained 0.3%.   

Overall, many analysts expect the dollar to continue its downtrend trend, which saw it lose nearly 7% in 2020 amid ultra-loose US monetary policy and hopes for a post-pandemic global recovery. 

However, there are likely bumps along the way for Biden as he tries to get another $2 to $3 trillion out there in spending approved which could benefit the greenback in the near term. 

Also, trade wars are starting to rear their ugly head again which might deter investors from taking on more risk, encouraging, instead, a flight into US Treasuries. 

USD/JPY technical analysis 

Technically, there is still a bullish bias in USD/JPY from a longer-term perspective. 

When comparing the monthly chart in the DXY to that of the weekly and daily charts, the bullish bias is compelling. 

DXY monthly chart

USD/JPY daily chart

The daily chart illustrates that the price has been unable to convincingly break below the 21-day moving average and is supported, instead, at a confluence area.

The area consists of prior highs and the combination of the 50% and 61.8% Fibonacci retracement zone. 

This is also where the nose of the weekly W-formation is located which may also act as a strong level os support.

A break, however, below this confluence of support will cement the case for a downside continuation. 

4-hour chart

Meanwhile, the technical environment is bearish on the 4-hour chart and only a bid through the 103.90 resistance structure will open up bullish prospects for the market once again. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD hits six-week high amid risk-on mood

EUR/USD has risen above 1.22, hitting the highest since mid-January. The US Fed's commitment to easing has boosted the market mood and the safe-haven dollar is down despite higher US yields. A big bulk of US data including GDP awaits traders.


AUD/USD breaks through critical 0.8000 level, fresh three-year highs

AUD/USD rides the reflation wave higher. The aussie reaches the highest since February 2018. Surge in commodities complex underpins the AUD.


Gamestop (GME) Stock Price and Forecast: Soars 273% as “diamond hands” trigger meme stock comeback

NYSE: GME is trading at around $168 in Thursday's premarket trade, up 273% from Wednesday's early trading price. The departure of the CFO served as the trigger to the fresh buying frenzy. Retail traders that have held onto shares seem to be behind the surge.

Read more

Dogecoin on the verge of a 75% lift-off

Dogecoin price has been lull ever since the local top on February 7. However, a 20% surge due to Elon Musk’s recent endorsement has led to a breakout from a bull flag pattern. Now, the meme coin could surge 75% to record levels soon.

Read more

US Dollar Index looks depressed near 90.00 ahead of data

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main rivals, remains under heavy pressure around the key 90.00 neighbourhood in the second half of the week.

US Dollar Index News