USD/JPY Forecast: Heading towards November low at 103.17

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USD/JPY Current price: 103.82

  • Japan National inflation contracted by more than expected in October.
  • The poor performance of equities continues to favor the Japanese yen.
  • USD/JPY to accelerate its decline once below 103.50, the immediate support level.

The USD/JPY pair has traded uneventfully at the end of the week, closing Friday at 103.82. The Japanese currency benefited against its American rival from the poor performance of equities, with Wall Street closing in the red. Additionally, US Treasury yields edged lower, amid tensions between the US Federal Reserve and Treasury Secretary Steve Mnuchin, related to emergency funding programs.

Japan published the October National inflation,  which came in worse than anticipated at -0.4% YoY. The core CPI matched expectations printing -0.7% YoY. The country also released the November preliminary Jibun Bank Manufacturing PMI that contracted to 48.3 from 48.7. Japan celebrates a holiday this Monday, which leaves the macroeconomic calendar empty.

USD/JPY short-term technical outlook

The USD/JPY pair has found sellers around 104.00 in the last two trading days, and technical readings suggest that a new leg lower is coming. In the daily chart, the pair is developing below firmly bearish moving averages, as technical indicators consolidate within negative levels. In the shorter-term, and according to the 4-hour chart, the risk is also skewed to the downside, as a bearish 20 SMA provides resistance, accelerating its slump below the larger ones. Technical indicators develop below their midlines but lack directional strength.

Support levels: 103.50 103.15 102.80

Resistance levels: 103.95 104.25 104.70  

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