USD/JPY Bounces-Off 50-DMA Support, Re-Attempts 110?

USD/JPY Bounces-Off 50-DMA Support, Re-Attempts 110?

23 May 2016, 06:33
Roberto Jacobs
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USD/JPY Bounces-Off 50-DMA Support, Re-Attempts 110?

The USD/JPY pair is seen making minor-recovery attempts from a drop to 50-DMA support located at 109.65, as markets digest the latest comments from the BOJ officials amid weaker Japanese datasets.

USD/JPY catches fresh bid near 3-day low

The dollar-yen pair is recovering ground somewhat, having dipped sharply in the overnight trades from above 110 handle, as the yen came renewed selling pressure after BOJ Governor Kuroda noted that the central is prepared to ease further whenever required. While BOJ deputy governor Nakaso’s speech underscored concerns over the ongoing effects of the accommodative policy on the Japanese economy.

Moreover, weaker Nikkei Japanese manufacturing PMI reading combined with poor domestic exports/imports data also helped rescue the bulls. Japan Nikkei PMI manufacturing came in at 47.6 vs 48.2, hitting the lowest level since Dec 2012. Meanwhile markets continue to mull over weekend’s G7 meeting outcome, with Japan’s Aso comments on the JPY, still lurking on investors’ minds. At the time of writing, USD/JPY trades at 109.82, moving-off three-day lows reached at 109.64 earlier on the day, still down -0.34%.

The week ahead has a lot in stored for the major, in terms of economic news, with the durable goods and GDP figures from the US, Japanese CPI data and Fed Chair Yellen’s comments expected to remain in the spotlight.

USD/JPY Technical levels to watch

In terms of technicals, the immediate resistance is located at 110.02 (5-DMA). A break above the last, the major could test 110.50/59 (psychological levels/ 3-week top). While to the downside, the immediate support is seen at 109.50/295 (psychological levels/ 1h 200-SMA) and below that at 109.00 (round number).


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