USD/JPY Forecast: Losing bullish momentum but could still advance

content provided with permission by FXStreet

USD/JPY Current price: 110.12

  • Japanese markets will remain closed amid an extended local holiday.
  • US Treasury yields reached fresh weekly highs, retreated afterwards.
  • USD/JPY is partially losing its strength, but there are no signs of an upcoming slide.

The USD/JPY pair hovers around 110.10, little changed on a daily basis. The pair held at the upper end of its weekly range but was unable to extend it amid a softening mood during US trading hours. The yield on the 10-year US Treasury note hit an intraday high of 1.317% but closed the day in the red, near a daily low of 1.233%. Meanwhile, Wall Street was unable to follow the good tone of its overseas counterparts, ending the day mixed around their opening levels.

Japan will celebrate a second consecutive holiday on Friday, which means there won’t be macroeconomic releases to take care of.

USD/JPY short-term technical outlook

The USD/JPY pair retains a neutral-to bullish stance in the near- term.  The 4-hour chart shows that it keeps developing between moving averages, with the 20 SMA advancing modestly below the current level and the 100 SMA capping advances in the 110.40 region. Technical indicators resumed their advances within positive levels, but hold below their weekly highs, somehow signaling decreased buying interest. The pair needs to break above 110.45 to confirm a new leg higher, which could extend beyond 111.00.

Support levels: 109.80 109.40 109.05  

Resistance levels: 110.45 110.90 111.25

View Live Chart for the USD/JPY