• Demand for bonds is on the rise amid a deterioration in the global economic outlook.
  • US stocks drop on Tuesday boosting further the yen.
  • USD/JPY breaks range and extends retreat from multi-year highs.

The USD/JPY ended with days of consolidation with a sharp decline on Tuesday. The pair broke under 127.00 and tumbled to 126.34, the lowest level in a month. It remains near the lows, under pressure amid risk aversion.

The decline of USD/JPY gained momentum on the back of a weaker US dollar, lower yields and as stocks in Wall Street turned red. The Dow Jones is falling 0.83% and the Nasdaq drops by 2.78%. The US 10-year yield stands at 2.73%, a four-week low while the 30-year is back under 3%.

Economic data from the US came in below expectations (PMIs and New Home Sales) and weighed on the greenback. The DXY is falling 0.37%, trading at 101.70, the lowest in almost a month.

Analysts at MUFG Bank, see the USD/JPY pair with a bearish bias, moving in the range 122.00/129.50 during the next weeks.  “The main risk to our bearish outlook for USD/JPY would be if global growth concerns eased in the month ahead. A pick-up in China growth could be one potential trigger. The upward impact on global yields, commodity prices and a potential stabilization for global equity markets should encourage a higher USD/JPY even if the USD weakens more broadly. Yen weakness would be more evident though against high beta commodity currencies.”

If the USD/JPY extends the decline, below the 126.30 support line, 126.00 is the next target followed by 125.75 (April 11, 12 high). A recovery now would face an immediate resistance at the 127.00/05 area. Above the next one might be seen at 127.60 and then comes a downtrend line at 128.30.

Technical levels

USD/JPY

Overview
Today last price 126.57
Today Daily Change -1.34
Today Daily Change % -1.05
Today daily open 127.91
 
Trends
Daily SMA20 129.26
Daily SMA50 125.89
Daily SMA100 120.54
Daily SMA200 116.54
 
Levels
Previous Daily High 128.07
Previous Daily Low 127.16
Previous Weekly High 129.78
Previous Weekly Low 127.02
Previous Monthly High 131.26
Previous Monthly Low 121.67
Daily Fibonacci 38.2% 127.72
Daily Fibonacci 61.8% 127.51
Daily Pivot Point S1 127.36
Daily Pivot Point S2 126.8
Daily Pivot Point S3 126.44
Daily Pivot Point R1 128.27
Daily Pivot Point R2 128.63
Daily Pivot Point R3 129.18

 

 

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