USD/JPY Forecast: Risk-on weighs on the greenback
|USD/JPY Current price: 107.67
- Economic reopenings and hopes for a coronavirus vaccine lift the market’s mood.
- Japan’s data missed the market’s expectations, US Consumer Confidence up next.
- USD/JPY under pressure, dollar’s broad weakness skews the risk to the downside.
An upbeat market’s mood leads the way this Tuesday, as investors turn their eyes to economic reopenings and developments around a coronavirus vaccine. Germany announced its ready to lift travel bans from multiple countries, as Spain moves into the final phase of lockdown. The US is also in its way back to normal, with business open in multiple states. Fears of a second wave of contagion have somehow diminished as the epicentre of the pandemic has translated to South America. The dollar is down across the board, although the USD/JPY pair remains within familiar levels, as the market ignores it.
Meanwhile, a US biotechnology company, Novavax, announced that it has started human trials of a COVID-19 vaccine in Australia, and expected results from the trial in July. Up to today, there are a dozen different promising vaccines being studied around the world.
In the data front, Japan published its Corporate Services Price Index for April, which resulted in 1.% YoY, worse than the 1.9% expected. The All Industry Activity Index for March declined by 3.8%, also missing the market’s expectations. The US calendar includes some housing data and regional activity indexes, and the CB Consumer Confidence Index, foreseen at 87.1 from 86.9 previously.
USD/JPY short-term technical outlook
The USD/JPY pair is easing from a daily high of 107.91, now trading near its weekly low at 107.65. The 4-hour chart indicates that the neutral stance persists as the pair is still holding above a flat 20 SMA, while above the larger ones. Technical indicators diverge on direction, although both continue to hover within neutral levels. Given the broad dollar’s on a risk-on mood, the risk for the pair turned to the downside, with further declines expected on a break below 107.30, the immediate support level.
Support levels: 107.30 106.90 106.65
Resistance levels: 108.10 108.45 108.80
View Live Chart for the USD/JPY
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