USD/JPY Forecast: Poised To Test 109.65

USD/JPY Current Price: 109.93

• Fears of recession exacerbated by the coronavirus spreading through Europe.
• The US 10-year Treasury yield fell to a record low of 1.32%, sets nearby.
• USD/JPY poised to test 109.65, break below it exposes monthly low at 108.31.

The USD/JPY pair fell to the 110.00 level during the American afternoon, trading not far above the level as the day comes to an end. Demand for safe-haven assets remained high amid recession fears. Disappointing macroeconomic figures coupled with US government bond yields falling to record lows and coronavirus-related headlines, showing that the outbreaks is extending its claws in Europe. The US 10-year Treasury yield fell to a record low of 1.32%, while US indexes plunged for a second consecutive day.

Japanese data was mixed, as the January Corporate Service Price Index beat expectations, up to 2.3% from 2.1% previously. The Leading Economic Index for December met the market’s expectations as it came in at 91.6, although the Coincident Index was downwardly revised to 94.1. US data, on the other hand, missed the market’s expectations, further hurting demand for the dollar.  Japan won’t release macroeconomic data this Wednesday.

USD/JPY Short-Term Technical Outlook

The USD/JPY pair is down for a third consecutive day, and at risk of extending its slump. The 4-hour chart shows that the pair is below its 100 SMA for the first time since early February, while the 20 SMA turned sharply lower over 100 pips above the current level. Technical indicators maintain their bearish slopes near oversold readings. An extension below the 110.00 level favours a downward continuation toward 109.65, where the pair bottomed on February 18.

Support levels: 109.65 109.30 108.90

Resistance levels: 110.35 110.60 110.95

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