“¢ A modest pullback in the US bond yields stalls the recent positive momentum.
“¢ Improving risk sentiment/follow-through USD uptick helps limit the downside.
The USD/JPY pair struggled to capitalize on the early uptick to near two-week tops and is currently placed at the lower end of its daily trading range, around the 111.30-35 region.
The pair stalled its recent positive momentum from the key 110.00 psychological mark, though the latest optimism over easing fears of a deeper economic slowdown in China continued lending some support and helped limit any deeper losses.
A modest pullback in the US Treasury bond yields, amid the prevalent cautions mood around equity markets, turned out to be one of the key factors prompting some long-unwinding trade, albeit the downside remained cushioned amid a follow-through uptick in the US Dollar.
Despite yesterday’s disappointing monthly retail sales figures, the greenback managed to attract some renewed buying interest and was supported by stronger than expected release of the US ISM manufacturing PMI that showed an unexpected uptick to 55.3 in March.
Hence, traders are likely to wait for a strong follow-through selling before confirming that the recent up-move might have already run out of steam and positioning for any further near-term depreciating move ahead of today’s release of the US durable goods orders data.
Technical outlook
Omkar Godbole, FXStreet’s own Analyst and Editor, writes: “As can be seen, the spot is struggling to beat the 200-day moving average (MA) hurdle, currently at 111.41. The struggle to beat the key MA hurdle coupled with the bearish divergence of the hourly chart RSI indicates scope for a minor pullback to the ascending 50-hour MA, currently at 111.04.”
“A strong bounce from that bullish average could end up recharging engines for a sustained move above the expanding falling channel resistance at 111.58. A channel breakout, if confirmed, would imply a resumption of the rally from the January lows below 105 and with RSI bullish at 55.00, the breakout could be followed by a convincing move above 112.14,” he added further.
Share
