USD/JPY Forecast: Consolidating losses, at risk of falling

USD/JPY Current price: 109.82

• Japan Leading Economic Index improved to 99.7 in February, missing expectations.
• The US Federal Reserve will publish the Minutes of its latest meeting.
• USD/JPY is at risk of extending its decline on a break below 109.50.

The USD/JPY pair keeps trading below 110.00, consolidating its latest losses. Demand for the greenback remains subdued as Treasury yields continue to retreat ahead of the US Federal Reserve Minutes of its latest meeting. The yield on the benchmark 10-year Treasury note is currently around 1.64%.  Meanwhile, stocks see limited volatility. Wall Street closed with modest losses, Asian shares are down, while European indexes trade mixed around their opening levels.

Japan published the preliminary estimate of the February Leading Economic Index, which improved from 98.5 to 99.7 but missed the market’s expectations of 100.7. The Coincident Index for the same period contracted from 90.3 to 89. The US will publish the February Trade Balance, expected to post a deficit of $-70.5 billion.

USD/JPY short-term technical outlook

The USD/JPY pair is at risk of extending its decline according to near-term readings. The 4-hour chart shows that it is trading just above a mildly bullish 100 SMA but below a firmly bearish 20 SMA. Technical indicators hold near oversold levels without signs of turning higher. A steeper decline could be expected on a break below 109.50, the immediate support level.

Support levels: 109.50 109.15 108.70

Resistance levels: 109.95 109.30 110.60

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