- USD/JPY slumps during the day, despite broad US dollar strength across the board.
- Lower US T-bond yields weighed on the USD/JPY pair, benefiting the Japanese yen.
- USD/JPY: Bullish above 114.00, otherwise range-bound, with 113.50 as strong support.
The USD/JPY slides during the New York session, down 0.21%, trading at 113.76 at the time of writing. As portrayed by US stock indices rising between 0.01% and 1.30%, market sentiment is upbeat, except for the Dow Jones Industrial losing 0.35%. In the FX market, risk-averse sentiment prevails, as safe-haven peers appreciate, thus favoring the Japanese yen, versus the greenback.
In the meantime, the US Dollar Index, a basket of six currencies, rises almost half percent, up to 94.32. Contrarily, the US 10-year Treasury yield drops six basis points, sits at 1.519%, a tailwind for the USD/JPY, due to its high correlation.
USD/JPY Price Forecast: Technical analysis
4-hour chart
The USD/JPY is in consolidation within the 113.50-114.50 range. Furthermore, the 50 and the 100-simple moving averages (SMA’s) hover around 114.00, acting as a tailwind for price action in the last couple of days. It’s worth noticing that the 113.50 is a level respected by USD/JPY traders, in which the pair bounced off towards the top of the range. Nevertheless, the almost horizontal slope of the moving averages does not provide enough clues for the direction of the trend.
For USD bulls to resume the upward trend, they need to reclaim the 114.00 figure. In that ourcome, the following resistance on the way north would be the downslope trendline that travels from October 20 high towards November 1 high, around 114.30. A breach of the latter would expose the 2021 high at 114.70.
On the flip side, a break below 113.50 could open the way for further losses. The first demand zone would be 113.00, followed by the September 30 high at 112.00.
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