USD/JPY Forecast: Lower lows still at sight
USD/JPY Current Price: 105.39
- Japan’s All Industry Activity Index contracted by 3.5% in May, better than the previous -7.6%.
- US equities advanced, Treasury yields bounced, but the greenback remained under pressure.
- USD/JPY pressuring lows and at risk of extending its decline towards the 104.40 price zone.
The USD/JPY pair traded as low as 105.11, a level that was last seen in March this year, to later stabilize around the 105.40 price zone. The pair held near its daily low despite the positive tone of US equities and government bond yields posting a modest intraday bounce, as speculative interest kept pricing-in a steeper US economic downturn.
Data coming from Japan at the beginning of the day was mostly discouraging, as the May All Industry Activity Index, which resulted in -3.5% from -7.6% in the previous month. The Leading Economic Index for the same month was downwardly revised to 78.4 while the Coincident Index came in at 73.4, below the previous estimate of 80.1. The country will publish early Tuesday the Corporate Service Price Index, foreseen in June at 0.5% YoY from 0.8% in the previous month.
USD/JPY short-term technical outlook
The USD/JPY pair retains its bearish stance heading into the Asian opening, as technical indicators continue to head lower within extreme oversold levels, just partially losing their directional strength. The 20 SMA heads lower almost vertically, well above the current level and above the larger ones. The pair has room to extend its decline towards the 104.40 price zone on a break below the mentioned daily low.
Support levels: 105.10 104.80 104.45
Resistance levels: 105.50 105.80 106.10
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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.
