USD/JPY Forecast: Recovery falling short of reflecting buying interest
|USD/JPY Current Price: 108.57
- A better market mood helped the USD recover in detriment of safe-haven JPY.
- Speculative interest could resume yen buying on re-escalating Middle-East tensions.
- USD/JPY advanced for a second consecutive day, remains below critical 108.90.
The USD/JPY pair advanced for a second consecutive day, ending the American session with modest gains at around 108.50. The American currency recovered alongside equities, on relief tensions between the US and Iran didn’t escalate further. US Treasury yields also recovered, underpinned by upbeat US data. The yield on the benchmark 10-year note popped to 1.82%, settling not far below this last. Threats between the US and Iranian leaders continued, although the market has put them aside, at least for now.
Japan’s Monetary Base was up by 3.2% YoY in December, according to the official report released at the beginning of the day, although the Jibun Bank Services PMI fell in the same month to 49.4, missing the market’s expectations and below the previous 50.3. This Wednesday, the country will only release November Labour Cash Earnings.
USD/JPY short-term technical outlook
The USD/JPY pair is trading a few pips above the 38.2% retracement of its latest decline, but the upside potential continues to be limited, as investors are ready to resume safe-haven buying if tensions re-escalate. In the 4-hour chart, the pair advanced above a bearish 20 SMA but remains far below the larger ones, while the Momentum indicator eases within positive levels, and the RSI stands directionless at neutral levels.
Support levels: 108.00 107.70 107.30
Resistance levels: 108.90 109.30 109.65
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