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Yen slump to a five-year low against USD

A new year, however, some trends are seen at the back the last year remains. Japanese Yen selling showed little signs of change, having come off the back from its worst performance against the USD since 2014. USD/JPY is now trading at almost the highest level since JAN 2017 after moving above 115.50 overnight amid the surge higher in US yields (US 10yr rose 11bps in yesterday’s session). That said, while higher yields and equities have weighed on JPY, the market view favours those currencies where central banks are looking to raise rates over low yielders are also at work with cross-yen notably firmer.

USD/JPY Weekly Outlook

Taking a look at the USD/JPY Daily Chart, Yesterday’s lower closing has formed a Dragonfly Doji pattern while the pair continues to move lower in today’s session as well. The RSI has just come out of the overbought zone while the MACD is above the zero line and favours the bulls. The pair is keeping above the mid-Band with upper and lower bands at 116.22 and 112.82 respectively. The pair is also keeping above the 50 periods moving average. The technical indicators are currently negating the small correction and it seems there are multiple support areas near the current price.

Based on the intraday and weekly price patterns, the pair is likely to resume the uptrend and head towards a higher weekly closing. However, on the upside 116.00 remains a stiff resistance area and only a breach above this level favours a higher weekly closing between 116.50 and 117.00. On the flip side, a rejection below 115.25 may also trigger sell-offs but the chances appear slim.