USD/JPY Forecast: Neutral-to-bearish, 109.40 immediate support
|USD/JPY Current Price: 109.66
- Market players remain cautious amid persistent coronavirus-related fears.
- Japan to release January Machine Tool Orders this Tuesday.
- USD/JPY losing bullish strength, further declines not yet confirmed.
The USD/JPY pair has spent the first trading day of the week hovering around 109.70, where it left on Friday. It posted a lower low and a lower high daily basis, reflecting lingering concerns about the coronavirus outbreak. Equities closed in the red in Asia and Europe, although US indexes posted modest intraday advances. Government debt yields eased, as investors remain cautious and willing to run into safety.
The Japanese macroeconomic calendar included the January Eco Watchers Survey on the current situation, which came in at 41.9, beating the market’s expectations, although the survey on the outlook deteriorated to 41.8. The December Trade Balance printed a surplus of ¥120.7B, recovering from a ¥-2.5B in the previous month, although the Current Account surplus contracted to ¥524B. The country will release January Machine Tool Orders this Tuesday, previously at -33.6%.
USD/JPY short-term technical outlook
The USD/JPY pair offered a neutral-to-bearish stance throughout the day, now heading into the Asian session with the same tone. The 4-hour chart shows that a flat 20 SMA capped the upside, although the pair held above directionless 100 and 200 SMA. The Momentum indicator has entered negative territory but lacks directional strength while the RSI is flat at around 53. The bearish case could become clearer on a break below 109.40, the immediate support, with the market then targeting the 108.65 region.
Support levels: 109.40 109.00 108.65
Resistance levels: 110.00 110.35 110.70
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