USD/JPY: Relevant support level comes at 103.50

USD/JPY is nearing this month’s low at 103.66 as optimism outpaces the sour reality. The risk of a bearish extension increases though the pair is still above the 103.50 support level, Valeria Bednarik, Chief Analyst at FXStreet, reports.

Key quotes

“Over the weekend, EU and UK leaders decided to extend Brexit talks into this week, despite still being unable to clinch a trade deal. The continued extension in negotiations somehow suggests that both parts are unwilling to end without an agreement. US stimulus talks are also playing against the greenback and in favor of high-yielding assets.”

“A break below the 103.50 support level should open the doors for a steeper decline.”

“Technical readings in the 4-hour chart favor a downward extension, as the USD/JPY pair has accelerated south below all of its moving averages, with the 20 SMA slowly detaching from the 100 SMA. The Momentum indicator heads firmly lower within negative levels while the RSI is stable around 34 without bearish exhaustion signs.”