USD/JPY Recovers a Bit to 109.25 ahead of ISM Manufacturing
USD/JPY Recovers a Bit to 109.25 ahead of ISM Manufacturing
Strong Yen demand across the board has put heavy downward pressure on the USD/JPY pair that dropped to a fresh session low level of 109.00 before recovering a bit, to currently trade near 109.25.
Risk-off sentiment led to a sell-off in global equity markets and boosted demand for the perceived safe-haven currency, Yen. Adding to it, rise in Japanese Capital Spending by 4.2% in the first-quarter, as compared to expected rise of 1.9%, might now lead to an upward revision of the Japanese first-quarter GDP growth rate.
Moreover, confirmation of a delay in sales-tax hike until October 2019, on concerns over fragility of the global economy, seems to have forced investors to cover their bearish bets against Yen. This couple with Tuesday's softer US economic data seems to diminish prospects of a Fed rate-hike decision on June 15 and weighing on the greenback.
Ahead of Friday's US monthly jobs report, today's US May ISM Manufacturing PMI might could provide further volatility for the USD/JPY pair.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet notes, "Down over 200 pips from its Monday's peak, the pair is extremely oversold in the short term, but there are no technical signs that it can reverse course. In the 1 hour chart, the price is well below its moving averages, whilst the technical indicators have partially lost downward strength, but remain in extreme oversold levels. In the 4 hours chart, the price is struggling around a horizontal 200 SMA after breaking below the 100 SMA, whilst the technical indicator maintain their sharp bearish slopes well below their mid-lines, supporting some additional declines on a break below 109.05, the immediate support."
"Support levels: 109.05 108.70 108.30"
"Resistance levels: 109.50 110.00 110.40"
