USD/JPY defends key Fib level ahead of US data release

  • Selling stalls near 50% Fib R for the second day.
  • Eyes US inflation and retail sales release.

The pair defended 111.03 (50% Fib R of Sep-Nov rally) in Asia probably due to the rising 10-year US-Japan bond yield spread.

As of writing, the USD/JPY is trading largely unchanged at the day at 111.20 levels. Meanwhile, the yield spread stands at 247 basis points, having risen 00 basis points in a steady manner over the last one month.

More importantly, the spread is closing in on a critical resistance at 253 basis points and may take out the same if the US CPI and retail sales number (due at 13:30 GMT) betters estimates. A further rise in the yield spread would add credence to the bullish price-RSI divergence seen on the 4-hour chart and may push USD/JPY higher to 112.00 levels.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "the pair maintains its bearish tone according to technical readings in the 4 hours chart, as it holds well below its 100 and 200 SMAs, with the shortest gaining traction downward above the larger, and with technical indicators resuming their declines near oversold readings. An immediate support comes at  111.83, November low, with a break below this last, opening doors for an extension toward the 110.00 figure.

Support levels:   110.85 110.50 110.10

Resistance levels: 111.60 112.00 112.40


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