- USD/JPY is on the backfoot at the start of the week, with the price down to test the hourly 200 SMA at 109.37.
- USD/JPY is currently trading at 109.37, down from 109.60 with a low of 109.32.
The yen was performing on Friday despite the risk on sentiment and positive performance in stocks. The sentiment was fuelled by Treasury Secretary Mnuchin reporting that the China trade talks were “making lot of progress” to Reuters. This follows the comments from Commerce Spectate Ross when he told CNBC that “We’re miles and miles from getting a resolution,” which had sent stocks into a tailspin earlier in the week. All ears will be to the ground for when The Treasury secretary will receive Chinese Vice Premier Liu He to Washington this week.
“We think USDJPY will remain confined to a broad 105/110 corridor. Equity repatriation and limited follow-through in US rates should keep the pair capped. Over the medium-term, JPY valuations remain attractive and continue to suggest an asymmetric profile skewed towards yen appreciation,” analysts at TD Securities explained.
USD/JPY levels
- Support levels: 109.05 108.75 108.40
- Resistance levels: 110.00 110.40 110.85
Valeria Bednarik, Chief Analyst at FXStreet explained that despite holding within familiar levels and above a major Fibonacci level, the 61.8% retracement of its latest downward move at 109.05, the USD/JPY pair seems poised to keep losing ground during the upcoming days:
” In the daily chart, the Momentum indicator holds above its mid-line trying to recover some ground but the RSI heads nowhere around its mid-line, while the pair continues developing well below its moving averages. In the 4 hours chart, the upside potential seems also limited, given that technical indicators head lower with uneven strength and around their midlines, somehow suggesting that bulls’ interest is fading. In the mentioned chart, the pair remains trapped between directionless 100 and 200 SMA.”
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