USD/JPY Forecast: Bouncing from 107.00, still at risk of reaching lower lows

Valeria Bednarik FXStreet

USD/JPY Current Price: 107.12

Wall Street edges lower as US Treasury yields extended their slides, backing the yen.
Japanese data continues to indicate a profound economic recession.
USD/JPY bounced from the 107.00 region, but a steeper recovery is out of the picture.

The USD/JPY pair traded as low as 106.98, ending the day a couple of pips above this last. The greenback came under selling pressure after the US Federal Reserve monetary policy announcement but managed to recover some ground against its European rivals as equities reacted negatively to the headlines. In turn, the poor performance of Wall Street maintained the yen stronger against its American rival. Furthermore, US Treasury yields extended their declines, with the yield on the 10-year note returning to its April/May levels.

Early on Wednesday, Japan published its May Producer Price Index, which fell by 2.7% YoY, worse than anticipated. Also, Machinery Orders fell by 12% MoM in April and were down by 17.7% when compared to a year earlier. During the upcoming Asian session, the country will only release minor figures related to foreign investment, hardly a market mover.

USD/JPY short-term technical outlook

The USD/JPY pair is trading at the lower end of its daily range and is still at risk of falling. The 4-hour chart shows that it has spent most of the day developing below the 200 SMA, which provided intraday resistance within Powell’s presser, currently at 107.50. The 20 SMA heads firmly lower well above the larger one, while technical indicators have barely bounced from oversold levels. The risk of a steeper decline should increase on a break below 106.95 and dilute if the pair recovers beyond 107.90.

Support levels: 106.95 106.60 106.25

Resistance levels: 107.50 107.90 108.25

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.

EUR/USD stays defensive below 1.1900 as USD recovers

EUR/USD trades in negative territory for the third consecutive day, below 1.1900 in the European session on Thursday. A modest rebound in the US Dollar is weighing on the pair, despite an upbeat market mood. Traders keep an eye on the US weekly Initial Jobless Claims data for further trading impetus.

GBP/USD holds above 1.3600 after UK data dump

\GBP/USD moves little while holding above 1.3600 in the European session on Thursday, following the release of the UK Q4 preliminary GDP, which showed a 0.1% growth against a 0.2% increase expected. The UK industrial sector activity deteriorated in Decembert, keeping the downward pressure intact on the Pound Sterling.

Gold sticks to modest intraday losses as reduced March Fed rate cut bets underpin USD

Gold languishes near the lower end of its daily range heading into the European session on Thursday. The precious metal, however, lacks follow-through selling amid mixed cues and currently trades above the $5,050 level, well within striking distance of a nearly two-week low touched the previous day.

Cardano eyes short-term rebound as derivatives sentiment improves

Cardano (ADA) is trading at $0.257 at the time of writing on Thursday, after slipping more than 4% so far this week. Derivatives sentiment improves as ADA’s funding rates turn positive alongside rising long bets among traders.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.