#USDJPY @ 127.817 Japanese yen extends gains across the board on Friday. (Pivot Orderbook analysis)

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• Japanese yen extends gains across the board on Friday.
• US Dollar up for the day, sharply lower for the week.
• USD/JPY drops for the second day in a row.

The pair currently trades last at 127.817.

The previous day high was 132.56 while the previous day low was 128.87. The daily 38.2% Fib levels comes at 130.28, expected to provide resistance. Similarly, the daily 61.8% fib level is at 131.15, expected to provide resistance.

The USD/JPY is falling sharply for the second day in a row and it is trading under 128.00 at the lowest level since late May of last year. The decline takes place even amid a modest recovery of the US Dollar following Thursday’s slide after US CPI data.

After a short-lived recovery, USD/JPY resumed the downside, breaking below 128.00. As of writing, it is trading at fresh lows at 127.70/75, as the recovery of the greenback losses momentum and Wall Street moves off lows.

The divergence between the Federal Reserve and the Bank of Japan that has been boosting the USD/JPY pair for months has now partially reversed, not because of clear action but on the back of a change in expectations. The Fed is seen near the end of its rate hike cycle while there are growing speculations about a shift at the Bank of Japan. Some reports indicate the BoJ could review the side effects of its ultra-accommodative policy as soon as next week.

Japanese bond yields soared also helping the JPY. The 10-year yield rose to the highest since 2015. On the contrary, the decline in US yields weighed on USD/JPY. The US 10-year yield stands at 3.46% compared to 3.70% from a week ago.

On Friday, the deterioration in risk sentiment contributed to the strength of the Japanese currency. The Dow Jones is falling by 0.15% while the Nasdaq declines by 0.35%.

The latest economic report of the week showed the US Michigan Consumer Sentiment Index rose in January to 64.6 surpassing expectations of 60.5.

Technical Levels: Supports and Resistances

USDJPY currently trading at 128.24 at the time of writing. Pair opened at 129.2 and is trading with a change of -0.74 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 132.69, 50 SMA 136.67, 100 SMA @ 140.72 and 200 SMA @ 136.62.

The previous day high was 132.56 while the previous day low was 128.87. The daily 38.2% Fib levels comes at 130.28, expected to provide resistance. Similarly, the daily 61.8% fib level is at 131.15, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 127.86, 126.52, 124.17
• Pivot resistance is noted at 131.55, 133.9, 135.24

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