USD/JPY Forecast: Near December’s low on dollar’s sell-off

USD/JPY Current price: 103.25

• Delayed US stimulus talks and coronavirus concerns backed the yen.
• US Treasury yields consolidated as Wall Street advanced.
• USD/JPY is at risk of extending its decline on the last day of the year.

The USD/JPY pair fell to 102.95, nearing this month’s low at 102.86, as the dollar remained under selling pressure while the market’s mood was sour, mainly throughout the first half of the day. Beyond a delay in US stimulus discussions, market players are looking at the latest covid-related stats, which show that the virus is once again accelerating its spread and stressing health systems in the northern hemisphere. Restrictive measures are in place with tougher ones in the docket.

The pair bounced from such a low as US equities posted substantial gains, while government debt yields held ground, with the yield on the benchmark 10-year note settling at 0.93%. The Japanese macroeconomic calendar will remain empty until next week.

USD/JPY short-term technical outlook

The USD/JPY pair trades around 103.0, with its bearish potential intact. The 4-hour chart shows that the pair remains below all of its moving averages, which offer sharp bearish slopes. Technical indicators resumed their declines within negative levels after a modest corrective advance. A steeper decline could be expected on a break below the mentioned December low.

Support levels: 102.80 102.40 102.10

Resistance levels: 103.50 103.90 104.30

View Live Chart for the USD/JPY