The yen opened the week rising across the board after Friday’s US data (soft CPI and a contraction in retail sales) and amid ongoing geopolitical concerns. The bond market continued to support the Japanese currency. The 10-year yield bottomed at 2.20%, the lowest since November and the bounced to the upside, rising toward 2.25%. The reversal in the bond market and the rally in US equity prices weakened the yen during the American session, pushing the USD/JPY pair to the upside.
The main trend continues to favor the downside, but the late recovery signals that the pair could have formed a short-term bottom at 108.10/15, particularly if it climbs above 108.80. The greenback is about to end the day with a doji formation, giving no clear signals for the near future. For the Asian session, USD/JPY could gain further momentum if it climbs above 108.80, above the next resistance might lia at 109.30 followed by 109.70. A failure at 108.80, would point to an upside exhaustion, giving signals of consolidation or a modest correction. Below 108.40 the bearish pressure could re-emerge. The next long term support is seen around 107.60/50.
Support levels: 108.40 108.20 107.60
Resistance levels: 108.80 109.30 109.70