USD/JPY Forecast: Increased chances of a bearish correction
|USD/JPY Current price: 109.95
- Markets in a better mood this Wednesday, providing support to USD/JPY.
- US Treasury yields bounced just modestly from fresh two-week lows.
- USD/JPY could turn bearish on a break below 109.70.
The USD/JPY pair is trading just below the 110.00 figure, marginally higher daily basis as fears have receded, although not completely disappeared. Concerns about a deadly virus outbreak in China remain, moreover after the US confirmed a case. Chinese authorities, however, cooled down concerns stating they are taking measures to control it.
Asian equities recovered, leading to an advance in European ones, which hold in the green. US Treasury yields are also recovering after falling to two-week lows on Tuesday. Japan didn’t release macroeconomic data during the Asian session. As for the US, the country will release some minor figures, including the Chicago Fed National Activity Index for December, and Existing Home Sales for the same month.
USD/JPY short-term technical outlook
The USD/JPY pair reached a daily high of 110.09 but was unable to hold on to gains. The short-term picture is bearish, according to the 4-hour chart, as the 20 SMA is slowly turning south above the current level, providing intraday resistance. Technical indicators, in the meantime, remain within negative levels, although lacking directional strength. The pair could accelerate its decline on a break below 109.70, the immediate support, exposing then the 109.00 figure.
Support levels: 109.70 109.35 109.00
Resistance levels: 110.10 110.40 110.75
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