FxWirePro: USD/JPY tracks S&P 500 futures higher, awaits convincing break above 21-EMA to extend gains

USD/JPY chart - Trading View 

Fundamental Overview:

USD/JPY was holding on to early Asian gains as the pair possibly tracks rise in the US stock futures.

The futures on the S&P 500, Wall Street's equity index and the benchmark for global equities was up over 4% earlier today suggesting risk reset across markets.

Yen weakness could also be attributed to Bank of Japan's (BOJ) liquidity injection on Monday.

BoJ held rates unchanged and offered to buy JPY 100 billion worth of Japanese government bonds at its policy meeting on Monday.

Technical Analysis: 

USD/JPY is showing signs of near-term reversal. Price action now rages above 200H MA.

Stochs and RSI on the daily charts are biased higher and MACD is on verge of bullish crossover on signal line.

Short-term moving averages on the GMMA indicator are turning higher. Parabolic SAR also supports gains.

21-EMA is capping upside in the pair. Decisive break above could see further upside.

Next major hurdle lies at 200-DMA (currently at 108.232). Breakout above 200-DMA required for sustained gains.

Support levels - 105.889 (5-DMA), 105.176 (200H MA), 104.44 (Aug 26, 2019 low)

Resistance levels - 107.18 (21-EMA), 107.78 (20-DMA), 108.23 (200-DMA)

Summary: Coordinated efforts by central banks has reset risk across markets. That said, economic implications of the coronavirus pandemic are yet to be quantified. Goldman Sachs has slashed its US Q1 GDP growth forecast to 0% vs. 0.7% previous. Economists expect China's economy to see steep downside. Near-term upside in USD/JPY is seen above 21-EMA and decisive breakout above 200-DMA required for sustained upside resumption, which looks uncertain as of now.

Guidance: Watch out for break above 21-EMA to go long with targets around 200-DMA. Trade with tight stops advised as volatility remains high.