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USD/JPY prepares a break below 101.00 (video)

    Kira Iukhtenko, FBS

USD/JPY spent the week in the 101.80/101.00 narrow range. As we see from the weekly chart, the pair found support at the 55-week MA. Note that the weekly bullish Ichimoku is not acting as a support anymore – the price spent the week in a “cloudy” area. Daily Ichimoku indicator is also giving out bearish signals.

10-year US Treasury yields hit a 1.5 month low this week, increasing bearish pressure on USD/JPY. Japanese yen remains supported by the increased risk aversion as investors seek safe haven currencies. Next week we expect the geopolitical tensions and the overall risk aversion to rule the game. The economic calendar is light, but don’t forget about the Japanese inflation data on Friday. We’ll see whether the rising trend in CPI persists or not.

Our bearish scenario will likely realize on the coming week. Break below 101.00 (support of a long-term bearish triangle) will open the way to 100.60 and 100.00 (50% Fibo). This mark is expected to act as a support, at least as a temporary one. Resistance is seen at 102.00, 102.30 and 102.80. We don’t recommend going long on the pair until it breaks above 102.80. 

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