- The greenback remains trading on the backfoot vs. the Japanese yen amid falling US Treasury yields.
- Risk-aversion, a headwind for the USD/JPY, as US equities finished with losses in the New York session.
- USD/JPY Price Forecast: Remains upward biased, though a dip towards 126.94 first and then 125.10 is on the cards.
The USD/JPY is losing some ground as the Asian Pacific session begins, down some 0.10%, as US Treasury yields could not recover from earlier losses, led by the 10-year benchmark note, down some three basis points, amid a risk-off market mood. At the time of writing, the USD/JPY is trading at 129.02.
US equities fell at the close of NY, and US Treasury yields rebound
Late in the New York session, market sentiment fluctuated, finishing downbeat, as market participants assessed the Federal Reserve monetary policy pace and China’s economic slowdown, courtesy of restrictions re-imposed on the last Covid-19 outbreak. US Treasury yields pare some losses in the long-end of the curve, but in the short and mid-end, dropped.
In the meantime, the US Dollar Index, a gauge of the greenback’s value against a basket of peers, suffered decent losses of 0.25% for the second straight session and sat at 104.206, retreating from multi-month highs around 105.00.
Meanwhile, Fed speaking dominated the headlines in the US docket. John Williams, NY Fed President, said that the US central bank is focused on one issue, named inflation, and added that it is running far too high and stubbornly persistent. He said that 50-bps rate hikes make sense at upcoming meetings and added to the list of central bankers, expressing worries about China’s economic deceleration.
Elsewhere, China’s Industrial Production and Retail Sales contracted, meaning that the zero-tolerance Covid-19 restrictions are already showing on the economic indicators, despite efforts made by the People’s Bank of China (PBoC), which is stimulating the economy but failing to provide the results foreseen by Beijing.
Data-wise, the US economic docket featured the New York Fed Empire State Index, which disappointed expectations of +17.0, and came at -11.6. Ahead in the week, April’s Retail Sales, Industrial Production, Building Permits, and Initial Jobless Claims would offer some fresh impetus to USD/JPY traders regarding the economic conditions of the US.
On the Japanese front, the GDP on its Preliminary reading is expected to grow by 1.1% in Q1, while annualized is foreseen at 5.4%, both readings to be released on Wednesday.
USD/JPY Price Forecast: Technical outlook
Since last Thursday, May 12, the USD/JPY broke below a one-and-a-half month-old upslope trendline, right at the 130.00 mark. As the major was printing higher highs, the Relative Strength Index was printing lower highs, usually called a negative divergence between the price action/oscillator. Nevertheless, the USD/JPY remains upward biased, but a break below 126.94 would expose the March 28 daily high-turned-support at 125.10.
The USD/JPY first support would be the 129.00 mark. Once cleared, the next support would be May 12 daily low at 127.51, followed by April’s 27 daily low at 126.94. On the flip side, and on the path of least resistance of the major, the first resistance would be 130.00, followed by the upslope trendline, passing nearby the 130.70-90 area, and then the YTD high at 131.34.
|Today last price||129.02|
|Today Daily Change||-0.12|
|Today Daily Change %||-0.09|
|Today daily open||129.2|
|Previous Daily High||129.46|
|Previous Daily Low||128.28|
|Previous Weekly High||131.35|
|Previous Weekly Low||127.52|
|Previous Monthly High||131.26|
|Previous Monthly Low||121.67|
|Daily Fibonacci 38.2%||129.01|
|Daily Fibonacci 61.8%||128.73|
|Daily Pivot Point S1||128.5|
|Daily Pivot Point S2||127.8|
|Daily Pivot Point S3||127.33|
|Daily Pivot Point R1||129.68|
|Daily Pivot Point R2||130.16|
|Daily Pivot Point R3||130.86|
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.