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USD/JPY - 1H 50-MA caps recovery, sub-111 protected by Jap importers

  • Technical recovery in USD/JPY ran out of steam at 1-hour 50-MA.
  • Reuters says sub-111 is being staked out by Japanese importers.

The USD/JPY ran into bids below 111.00 levels but failed to cut through the resistance offered by the 1-hour 50-MA.

The uptick in the pair lacked the support of the treasury yields. The 10-year yield remains flatlined around 2.33 percent. Also, the yield curve as represented by the spread between the 10-year yield and the 2-year yield remains flattest since Oct. 2007.

Consequently, the failure to take out the 1-hour 50-MA resistance is not surprising.  The outlook remains bearish as discussed here. However, chewing through bids below sub-111.00 would take fresh sell-off in the treasury yields. This is because sub-111 is being staked out by Japanese importers, some investors, as per Reuters report.

USD/JPY Technical Outlook

As of writing, the pair is trading at 111.14 levels.  FXStreet Chief Analyst Valeria Bednarik writes, " The pair has shed around 410 pips ever since topping at 114.72 at the beginning of the month,  maintaining a strong bearish trend according to technical readings in the daily chart, as the pair fell further below its 100 and 200 DMAs as technical indicators resumed their declines within bearish territory. In the shorter term, and according to the 4 hours chart, the risk is also lean towards the downside, as the price is well below its 100 and 200 SMAs, with the shortest extending below the larger, and technical indicators remain within a negative territory, although with limited directional strength."

Support levels: 110.80 110.35 110.00

Resistance levels: 111.20 111.60 112.00  

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