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The USD/JPY continues sliding for the third straight day, though the downtrend capped at April’s 27 daily low at 126.94, keeping the major’s uptrend intact amidst a downbeat market mood on the last trading day of the week, as the Wall Street close looms. At 127.82, the USD/JPY records minimal gains of 0.04%.
The USD/JPY pair loses for the second straight week, by 1.10%. The US dollar maintained its strength during the American session, boosted by a diminished market sentiment, as US equities reached fresh 52-week lows.
US equities are dipping between 1.51% and 2.49%. The Dow Jones and the Nasdaq reached a 52-week low, despite efforts from the People Bank of China to stimulate the Chinese economy when it cut rates in the 5-year Loan Prime Rate by 0.15%. Although the decision was cheered by investors in the Asian and European sessions, it was ignored in the US session, as options expiring tied to equities and ETFs increased volatility.
In the meantime, the US Dollar Index recovers some 0.23% in the day and sits at 103.102. Contrarily, US Treasury yields, led by the 10-year benchmark note, is down from a 3% high in the week to 2.774%, a headwind for the USD/JPY due to its tight positive correlation.
Technically; the USD/JPY’s price action pushed the exchange rate towards the Bollinger’s band bottom line, at around 127.12, where some USD/JPY buyers lifted the price towards current price levels. It is worth noting that the USD/JPY shifted from upward biased to neutral due to the major staying trading in the 127.00-129.78 range, unable to trade beyond those boundaries, amid a lack of a fresh impetus that could rock the pair towards new weekly/yearly lows/highs, respectively.
Upwards, the USD/JPY first resistance would be 128.00. A breach of the latter would expose essential resistance levels. Firstly, May’s 18 daily high at 129.53, followed by the 130.00 mark, and the YTD high at 131.34. On the flip side, the USD/JPY’s first support would be May 19 daily low at 127.02. Break below would expose April’s 27 swing low at 126.94, followed by the 50-DMA at 125.66.
