USDJPY Japanese Yen
USDJPY breaks up to ten-month highs as the rally that started yesterday accelerated today with a break above the 112.00 making fresh 10-month highs at 112.18. Fears that Japan will be hard hit by the coronavirus as the confirmed cases increasing in the country.
In my opinion the big hit came on Monday with a -6.3% annualized contraction of the GDP in the fourth quarter. The expectations were already low at -3.8% due to the sales tax hike. Above that another hit came from the machine orders numbers, which dropped -12.5% m/m in December worse than the -8.9% reading expected. That’s a big pullback from the +18.0% rise in November.
As the Q1 is increasingly looking like a negative one amid the coronavirus outbreak that might put the Japanese economy right back into recession. The two days sharp sell-off of the Japanese Yen would question the currency’s safe-haven status.
In the economic data from the USA the Philadelphia Fed Manufacturing Survey came in at 36.7, topping the expectations of 12 in February. The United States Initial Jobless Claims came in at 210,000 in line with forecasts for February 14th.
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USDJPY Technical Analysis
On the technical side, the USDJPY outlook is clearly bullish as the pair hit 10-month highs. While now both the fundamental and technical indicators support higher levels the extreme upward move the last two trading sessions have pushed the pair to overbought levels and outside the Bolinger Bands.
On the upside the intraday resistance stands at 112.21. Above that we have to go back in December 19 2018 to meet the next resistance level at 112.40.
On the other side, first support for USDJPY stands at 111.10 today’s low while extra bids will emerge at 109.84 the low from yesterday.
USDJPY technical picture is positive, as the pair breached the 112 mark and trades above all major daily moving averages while an escalation in the coronavirus cases in Japan and softer economic data can push the price up to 113.