USD/JPY Forecast: About to challenge December’s low

USD/JPY Current price: 103.13

• US Senator Mitch McConnell blocked chances to vote on increasing stimulus checks.
• The coronavirus pandemic continues to spread, stressing health systems.
• USD/JPY is technically bearish and heading towards 102.86, this month’s low.

The dollar’s sell-off continues in thin trading, with USD/JPY trading around 103.10, at its lowest in two weeks. US Republican Senator Mitch McConnell blocked a move by colleague Bernie Sanders to allow a vote on increasing stimulus checks from $600 to $2,000, adding pressure on the American currency. Also, US Treasury Secretary Steve Mnuchin announced that direct payments of $ 600 would be out as soon as this week.

Meanwhile, the number of new coronavirus cases is on the rise around the world. Cases of the new strain detected in the UK have been discovered in places as far as Israel and Chile. The death toll is on the rise in Europe, and health systems are stressed in the northern hemisphere. The UK approved the emergency use of the AstraZeneca vaccine, but immunization is just starting.

USD/JPY short-term technical outlook

The USD/JPY pair is under pressure amid worrisome news spurring risk aversion. It’s technically bearish, according to the 4-hour chart, as it accelerated its slump below all of its moving averages, with the 20 SMA turning south below the longer ones. Technical indicators head firmly lower within negative levels, with no signs of downward exhaustion. The decline will likely continue, mainly if the pair breaks below this month´s low at 102.86.

 Support levels: 102.80 102.40 102.10

Resistance levels: 103.50 103.90 104.30

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