USD/JPY Forecast: The risk remains skewed to the downside

USD/JPY Current price: 103.25

• The positive momentum of US equities prevented the pair from falling further.
• Japan will publish this Monday the December  Jibun Bank Manufacturing PMI.
• USD/JPY is technically bearish, could accelerate its slump on a break below 102.80.

The USD/JPY pair closed the week with losses at 103.25, confined to the lower end of December’s range. The pair recovered from a weekly low of 102.95 as US Treasury yields held ground while equities rallied, with the DJIA and the S&P reaching all-time highs. Still, and as demand for the greenback remained subdued, the pair was barely able to trim early losses.

Japanese markets were closed due to New-Year celebrations and published no macroeconomic figures. This Monday, the country will release the December Jibun Bank Manufacturing PMI, previously at 49.7.

USD/JPY short-term technical outlook

The USD/JPY pair is technically bearish and could extend its decline during the upcoming sessions. In the daily chart, a firmly bearish 20 SMA, currently around 103.70, has provided dynamic resistance throughout the week. Technical indicators hold at weekly lows, without directional momentum. In the 4-hour chart, the latest intraday recovery stalled below bearish moving averages, while technical indicators pared their recoveries from oversold readings well below their midlines. A steeper decline could be expected on a break below 102.80, the immediate support.

Support levels: 102.80 102.40 102.10

Resistance levels: 103.50 103.90 104.30

View Live Chart for the USD/JPY