USD/JPY Forecast: Increased chances of a bearish correction

Valeria Bednarik FXStreet

USD/JPY Current price: 109.95

Markets in a better mood this Wednesday, providing support to USD/JPY.
US Treasury yields bounced just modestly from fresh two-week lows.
USD/JPY could turn bearish on a break below 109.70.

The USD/JPY pair is trading just below the 110.00 figure, marginally higher daily basis as fears have receded, although not completely disappeared. Concerns about a deadly virus outbreak in China remain, moreover after the US confirmed a case. Chinese authorities, however, cooled down concerns stating they are taking measures to control it.

Asian equities recovered, leading to an advance in European ones, which hold in the green. US Treasury yields are also recovering after falling to two-week lows on Tuesday. Japan didn’t release macroeconomic data during the Asian session. As for the US, the country will release some minor figures, including the Chicago Fed National Activity Index for December, and Existing Home Sales for the same month.

USD/JPY short-term technical outlook

The USD/JPY pair reached a daily high of 110.09 but was unable to hold on to gains. The short-term picture is bearish, according to the 4-hour chart, as the 20 SMA is slowly turning south above the current level, providing intraday resistance. Technical indicators, in the meantime, remain within negative levels, although lacking directional strength. The pair could accelerate its decline on a break below 109.70, the immediate support, exposing then the 109.00 figure.

Support levels: 109.70 109.35 109.00

Resistance levels: 110.10 110.40 110.75

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 hovers around nine-day EMA above 1.1800

EUR/USD remains in the positive territory after registering modest gains in the previous session, trading around 1.1820 during the Asian hours on Monday. The 14-day Relative Strength Index momentum indicator at 54 is edging higher, signaling improving momentum. RSI near mid-50s keeps momentum balanced. A sustained push above 60 would firm bullish control.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold sticks to gains above $5,000 as China's buying and Fed rate-cut bets drive demand

Gold surges past the $5,000 psychological mark during the Asian session on Monday in reaction to the weekend data, showing that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Federal Reserve expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.