USD/JPY Forecast: Struggling to advance beyond 104.00, bearish

USD/JPY Current price: 104.11

• Japan Industrial Production beat expectations in October, according to preliminary estimates.
• The market sentiment is sour, with the greenback still the worst performer.
• USD/JPY is technically bearish and poised to extend its decline towards 103.50.

The USD/JPY pair is trading around 104.10, pretty much unchanged from its Friday’s close, although it has fallen to 103.82 during Asian trading hours and peaked at 104.36 early in the European session. The broad dollar’s weakness prevails, with the American currency down against all of its major rivals. The market sentiment is sour, with Asian equities in the red and European indexes struggling around their opening levels.

Japan published the preliminary October Industrial Production estimates. It was up 3.8% MoM, slightly below expected, and down by 3.2% YoY, much better than anticipated. October Retail Trade surged by 6.4% against the expected -7.7%. The country also published October Housing Starts, which declined 8.3% YoY, slightly better than expected.

The US will publish today, October Pending Home Sales, the November Chicago Purchasing Managers’ Index, and the Dallas Fed Manufacturing Business Index for the same month.

USD/JPY short-term technical outlook

The USD/JPY pair is technically bearish, with no signs of an upcoming advance in the near-term. The 4-hour chart shows that a bearish 20 SMA keeps limiting the upside as technical indicators consolidate within negative levels. The longer moving averages head south well above the shorter one, supporting a bearish extension towards the 103.50 price zone.

Support levels: 103.85 103.50 103.15

Resistance levels: 104.35 104.65 105.00   

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