USD/JPY analysis: no selling interest but upside capped by 110.16
|USD/JPY Current price: 109.98
- USD/JPY traded alongside Treasury yields, both confined to familiar levels this Wednesday.
- Holidays in China throughout the week keep volumes low in Asia.
The USD/JPY pair started the day with a soft tone, falling down to 109.55, bouncing later modestly, still unable to surpass the critical 110.00 figure. A holiday in China and New Zealand at the beginning of the day, alongside with no relevant macroeconomic releases in the region left the pair in the hands of developments around Treasury yields which retreated from weekly highs following US President Trump´s State of Union address, which failed to pour cold water on local political tensions. Yields recovered some ground later in the day, settling around Tuesday's closing levels. The pair trades uneventfully below 110.00 ahead of the release of the Japanese Leading Economic Index, foreseen at 97.0 vs. the previous 99.1 and the Coincident Index, previously at 102.9. The soft tone of European and American indexes could spread into Asian markets, favoring a downward move in USD/JPY.
Technical readings in the 4 hours chart indicate that, despite the lack of bullish momentum, there's no selling interest around the pair, as it is developing above its 100 and 200 SMA, with the shortest trying to gain ground above the larger one for the first time this year. The RSI indicator gains upward traction after testing its mid-line, heading higher at around 60. The upside will look more constructive if the pair breaks above 110.16, this year high.
Support levels: 109.50 109.05 108.65
Resistance levels: 110.15 110.45 110.90
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