USD/JPY attempts recovery towards 112.80

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 1, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    The USD/JPY pair is seen recovering losses and now regains 112.50 levels, as the Japanese stocks flip to gains alongside its other Asian counterparts.

    USD/JPY eyes 10-DMA

    A renewed bout of risk-on wave appears to hit the Asian markets, with the major indices extending higher into the positive territory and thus, supporting the recovery in the USD/JPY pair from 112.16, daily lows. At the time of writing, USD/JPY erases almost entire losses, now trading around 112.65. Meanwhile, the Japanese benchmark index, the Nikkei 225 advances 0.40% and the Shanghai Composite rises 0.20%.

    The negative impact of bearish Chinese manufacturing PMI reports was quickly faded by markets, as the recent stimulus measures by China continued to underpin the sentiment.

    However, the recovery looks fragile as the greenback remains broadly lower following Fed’s Dudley’s comments, citing balance of risks to his US economic outlook 'starting to tilt slightly to the downside' and that drop in inflation expectations remain a concern.

    In the day ahead, the major will get influenced by the ISM and Markit manufacturing PMI reports ahead of the US jobs report due later this week.

    USD/JPY Technical levels to watch

    In terms of technicals, the immediate resistance is located at 112.73/80 (1h 20-SMA/ 10-DMA). A break above the last, the major could test 113/113.13 (round number/ 5-DMA). While to the downside, the immediate support is seen at 111.78/75 (daily S1/ Feb 23 Low) and below that at 111.04/111 (Feb 24 Low/ psychological levels).
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