USD/JPY analysis: equities at record highs helped the pair bounce

Valeria Bednarik FXStreet

USD/JPY Current price: 107.85

US Treasury yields hit multi-year lows amid concerns about a global economic downturn.
Wall Street reached record highs, partially offsetting the negative effect of yields on USD/JPY.

The USD/JPY pair is trading in the 107.80 area, little changed daily basis. Earlier in the day, the pair fell to 107.52, dragged lower by plummeting government bond yields. The yield on the benchmark 10-year Treasury note hit 1.93% its lowest since November 2016, amid prevalent concerns about a global economic downturn. The pair recovered despite mostly discouraging US data, as US indexes remained on the winning side, with the Dow and the S&P reaching all-time highs. Earlier in the day, Japan saw the release of the Markit Services PMI for June, which resulted at 51.9, worse than the 52.0 forecast although better than the previous 51.7. The Asian country will only release minor data during the upcoming Asian session, hardly relevant in terms of market movements.

The USD/JPY pair trades around the 38.2% retracement of its latest bullish run after nearing the 61.8% retracement of the same rally earlier in the day, this last at 107.45. In the 4 hours chart, the pair continues developing below all of its moving averages, which lack directional strength, as technical indicators remain within negative levels, the RSI heading marginally higher at around 48 while the Momentum turned back south, all of which indicates a limited upward potential.

Support levels: 107.45 107.10 106.80

Resistance levels: 107.95 108.20 108.55

View Live Chart for the USD/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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