USDJPY Forecast: Hell remains loose
USD/JPY Current price: 103.63
Panic continues to fuel demand for safety, yen appreciates. Government’s and central banks’ measures seen as too little too late. USD/JPY to retest year low on a break below the 103.00 figure.
Panic dominates not only financial markets but the world. The WHO finally decided to declare the coronavirus outbreak a pandemic on Wednesday, as the illness is slipping out of hands worldwide. US President Trump decided to suspend all travels from Europe for the next 30 days, as many other countries take measures similar to the Italian lockdown announced earlier this week. Things escalate exponentially, triggering an endless run for safety.
The USD/JPY pair is firmly lower for a second consecutive day, trimming Tuesday’s gains triggered by Trump’s proposal of an economic stimulus counteract the impact of the outbreak, as it seems little can be done until it’s at least contained.
Meanwhile, BOJ Governor Kuroda met with Prime Minister Abe and said the central bank is ready to take the necessary steps to support the economy, through asset buying and by providing ample liquidity. Still, the measures announced seem too little too late. Japan’s February Producer Price Index contracted to 0.8% YoY in February from 1.5% in January.
The US will release today the February Producer Price Index and its usual weekly unemployment figures. Data will only be relevant as it reflects the ongoing fears of a recession.
USD/JPY short-term technical outlook
The USD/JPY pair keeps retreating from a weekly high of 105.91, now trading in the 103.60 price zone, battling with the 23.6% retracement of its latest daily collapse. The pair topped earlier this week between the 38.2% and the 50% retracement of the same slump with the first providing resistance at around 105.35. The daily chart shows that the 20 DMA is crossing below the larger ones, far above the current level, while technical indicators resumed their slumps after correcting extreme oversold conditions.
Shorter term, and according to the 4-hour chart, the risk is skewed to the downside, as the pair is below a directionless 20 SMA, while technical indicators head firmly south within negative levels after correcting extreme readings. The daily low comes at 103.07, with several intraday lows in the 103.00 region these last days suggesting the slump will likely accelerate once below the figure. The pressure could ease if the pair recovers beyond 104.20, although bears will retain control as long as below 105.35.
Support levels: 103.35 103.00 102.65
Resistance levels: 103.80 104.20 104.70
View Live Chart for the USD/JPY
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