USD/JPY to see a steeper decline once below 104.00

USD/JPY is consolidating weekly losses around 104.40 as concerns remain over the coronavirus spread. The pair is technically neutral in the short-term with risks skewed to the downside, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“Against other rivals, the greenback is firmly up weekly basis, as concerns rule, due to the spread of COVID-19 in the northern hemisphere. Asian and European shares were unable to follow Wall Street and trade in the red, although off daily lows amid better than expected German data.”

“Japanese data was generally discouraging, with October Tokyo inflation down 0.3% YoY and the core reading ex-fresh food falling 0.5% in the same period. September Housing Starts fell 9.9%, worse than the 8.6% expected, while Construction Orders were down 10.6%. On a positive note, the unemployment rate remained steady at 3%, while Industrial Production surged 4% monthly basis.”

“The 4-hour chart shows that the pair was unable to retain ground above a bearish 20 SMA, currently below it. The 100 and 200 SMAs maintain their bearish slopes well above the shorter-one, all of them indicating prevalent selling pressure. Technical indicators, in the meantime, hover within neutral levels, without clear directional strength.” 

“The USD/JPY pair has bottomed around 104.00 in September, and once again this October, with a break below the region opening doors for a steeper decline.”