USD/JPY Forecast: At fresh monthly lows and bearish

Valeria Bednarik FXStreet

USD/JPY Current Price: 106.50

Optimism related to economic recoveries triggered a dollar’s sell-off.
Japanese Leading Economic Index is foreseen at 76.2 in April as previously estimated.
USD/JPY below its former monthly low and at risk of falling further.

The USD/JPY pair fell to 106.06, its lowest since early May, to finish the day with losses around 106.45. The pair fell despite the solid advance in global indexes amid a generalized optimism about an economic comeback. In such a scenario, investors chose to sell the greenback. Meanwhile, US Treasury yields ticked modestly higher, with the yield on the 10-year Treasury note settling at 0.71%.

Japan released at the beginning of the day the preliminary estimate of June Jibun Bank Manufacturing PMI which, came in at 37.8, better than the 36.9 forecast but below the previous 38.4. This Wednesday, the country will publish the May Corporate Service Price Index, foreseen at 1.1% from 1.0% previously, and the Leading Economic Index for April, foreseen at 76.2 as previously estimated. The Coincident Index is also expected unchanged at 81.5.

USD/JPY short-term technical outlook

The USD/JPY pair is stable below its former monthly low at 106.56, with room to extend its decline during the upcoming sessions. The 4-hour chart shows that its recovery above a mild-bearish 20 SMA was short-lived, now developing well below it. Technical indicators have lost directional strength, but remain at daily lows within negative territory. The pair will likely resume its decline on a break below 106.25, the immediate support.

Support levels: 106.25 105.90 105.50

Resistance levels: 106.60 107.00 107.35

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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