USD/JPY Forecast: To Accelerate Its Decline On A Break Below 109.70 The Immediate Support

USD/JPY Current Price: 109.81

• Kuroda mild optimistic about the economy, concerned about abroad factors.
• A virus outbreak in China kept investors in risk-off mode.
• USD/JPY to accelerate its decline on a break below 109.70 the immediate support.

The USD/JPY lost some ground this Tuesday, under pressure at the beginning of the day amid a more optimistic BOJ and risk aversion triggered by a virus outbreak in China. The Bank of Japan left its monetary policy unchanged and presented its Quarterly Outlook report. Policymakers revised their GDP forecasts higher for this fiscal year and the next and revised lower inflation forecasts for both periods. Governor Kuroda expressed concerns about the side-effects of the current policy but reiterated they will continue with their easing policy. Among other things, he said that the local economy continues to expand moderately as trend.

The pair bottomed at 109.76 during US trading hours, as despite sentiment show signs of improvement, Wall Street was unable to post gains, undermined by headlines indicating that the virus outbreak is extending beyond China. US Treasury yields traded lower, with the yield on the benchmark 10-year note falling to a two-week low. Japan’s macroeconomic calendar has nothing to offer this Wednesday.

USD/JPY Short-Term Technical Outlook

The USD/JPY pair is trading at daily lows and while holding above 109.70, a relevant static support level. The short-term picture is bearish, as the 20 SMA has turned flat while providing intraday resistance at around 110.10. Technical indicators in the mentioned chart head firmly lower within negative levels, supporting additional declines ahead toward the 109.00 figure.

Image by Gerd Altmann from Pixabay