USD/JPY Forecast: Back to its comfort zone above 107.00

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.21

Japan Jibun Bank Manufacturing PMI improved to 42.6 in July, according to preliminary estimates.
US Treasury yields under pressure amid stubbornly high new daily coronavirus cases worldwide.
USD/JPY recovered the 107.00 threshold, but its bullish potential is well-limited.

The USD/JPY pair recovered once again from the 106.60 price zone and returned to its comfort zone a few pips above the 107.00 level. The sentiment remained sour throughout the day, fueled by US-China tensions and pandemic-related headlines. Nevertheless, a modest advance in US indexes has helped the pair to recover above 107.00 during US trading hours. US Treasury yields, in the meantime, edged lower with the yield on the benchmark 10-year note down to 0.58%, as concerns about the stubbornly high number of new daily coronavirus cases undermined the market’s mood. Over the last 24 hours, the world reported roughly 240,000 new contagions, with 67,000 of those coming from the US.

Japan published at the beginning of the day the preliminary estimate of the July Jibun Bank Manufacturing PMI, which came in better than anticipated, printing at 42.6 also improving from the previous 40.1. Japan will be on holiday this Thursday, as it celebrates Marine Day.

USD/JPY short-term technical outlook

The USD/JPY pair bounced from the base of its latest range, losing the bearish strength seen on previous updates. The pair is now neutral, according to the 4-hour chart, as technical indicators turned flat after reaching their midlines. In the mentioned time-frame, it has settled above its 20 SMA but remains below the largest one. The bullish potential seems well-limited by the broad dollar’s weakness.

Support levels: 106.95 106.60 106.20

Resistance levels: 107.45 107.80 108.15

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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