USD/JPY: 106 gives out where next?
- USD/JPY break the 106 handle to the downside.
- USD/JPY bearish bias persists.
The yen traded below the 107 handle again in the European session between 106.39-106.75 before risk sentiment turned lower in the NY session, supporting the yen that moved up vs the dollar to 106.06 after a 0.4% retail sales data miss vs expectations and lower GDP forecasts.
US retail sales fell 0.1% in February, a big miss vs the 0.3% gain while at the same time, the retail control group, a subset used for GDP calculations, rose a mediocre 0.1% (0.4% expected), after a flat Jan outcome, prompting widespread Q1 GDP downgrades. The Atlanta Fed GDP tracking model trimmed its Q1 projection to 1.9% annualised from 2.5%.
US yields slipping, USD/JPY down to test below 10-D SMA
The US 10yr treasury yield dropped from 2.85% to 2.81% with the 2yr yields chopping between 2.24% and 2.29% for little net change at 2.26%. Fed fund futures continued to price three more hikes by end-2018 and another hike in 2019. 106.38 was the session high for NY before the yen traded sideways into the close with the range stuck below the 21 and now extending below the 10-D SMA.
USD/JPY levels
Eyes over the daily sticks will notice that the yen pierced the descending channel's resistance having moved below the 21-D SMA. The downside, below the 105 handle, 104.80 opens up territory with little chart support towards 100.70/99.00 on the charts.
Valeria Bednarik, chief analysts at FXStreet explained that the technical indicators remain within a negative territory, but without clear directional strength. "Renewed selling interest below the 106.00 figure will likely result in a retest of the February low at 105.24," Valeria added.