USD/JPY analysis: bearish breakout favors a test of 110.00
|USD/JPY Current price: 110.69
- The US Federal Reserve gave USD/JPY traders a reason to react.
- Japanese banks will remain closed amid a local holiday.
The USD/JPY pair spent the first half of the day trading within familiar levels, around 111.40, as despite risk aversion dominated the Asian session, demand for the JPY remained subdued. As explained in previous updates, Japanese data has been highly disappointing, bolstering concerns about the economic developments in the country. Furthermore, BOJ's Governor Kuroda said that the central bank keeps supporting the local economy through the yield curve control, once again expressing concerns about Chinese economic developments. But the Fed provided the catalyst the market was looking for, resulting in the pair plummeting to 110.53, its lowest for this March. Japanese markets will be closed this Thursday on a local holiday, and therefore, activity could be reduced ahead of London's opening.
From a technical point of view, the pair is now bearish in the short-term, as in the 4 hours chart, it broke below its 100 and 200 SMA, below this last for the first time since early February. Technical indicators in the mentioned chart head south almost vertically, now in oversold territory, as the pair lost roughly 100 pips in a couple of hours. The decline is now set to continue as long as the pair remains below 111.00.
Support levels: 110.45 110.10 109.80
Resistance levels: 111.00 111.45 111.80
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