This neutral sentiment changed during the Asian session when the pair fell 50 pips in response to various fundamental events. Some downside potential still exists in the market today; thus, the pair could decline down to the 100– and 200-hour SMAs and the upper boundary of a three-month near 106.20. Given that no significant fundamentals are scheduled for this session, the US Dollar is unlikely to breach this support.
On the other hand, in case of a strong momentum, gains should be capped near the 107.50 mark where the weekly R1 and the monthly PP are located.
Minor downside risks dominated the USD/JPY exchange rate on Monday, as it closed the session with a 60-pip fall.
The lack of bearish stimulus did not allow the Greenback to breach the combined support of the 100– and 200-hour SMAs circa 106.30. Thus, the Asian session started with a solid surge which erased all losses accumulated during the previous day.
The pair is currently trading in a two-week ascending channel. Given that its lower boundary was not reached yesterday, the pair could reverse significantly its current market sentiment and go for a test of this line, the weekly PP and the 100-hour SMA at 106.40 during the first part of the day.
The remaining session is likely to be dominated by the US inflation data released at 1230GMT.
Despite showing high volatility on Tuesday, USD/JPY had returned near the 106.40 mark by Wednesday morning. The first part of the session was allocated to bulls who pushed the rate 91 pips higher to the 107.20 area.
The US inflation report drove the market in the opposite direction, thus allowing for fall down to the weekly PP at 106.40. Given that the Greenback moved below the 55– and 100-hour SMAs, this bearish movement might continue in this session, as well.
The nearest support of significance is the 200-hour SMA at 106.20, while the 105.80 area is restricted by the weekly S1. The pair should eventually edge higher towards the weekly R1 and the monthly PP near 107.50, as no other resistance levels that could limit further advances are located in between.
The USD/JPY exchange rate has been guided by bearish sentiment for the second consecutive session. The pair has fallen 135 pips during this time, thus dashing through various support levels along the way. By Thursday morning, the pair was located near the 105.85 mark where the weekly S1 and the upper boundary of a three-month channel is located.
Technical indicators are located in the strongly bearish area, suggesting that some upward correction should occur soon. It is likely that the Greenback forms a retracement form the senior channel circa 105.80 and pushes for the 55– and 100-hour SMAs near 106.60.
In case no fundamental events shake the market in this session, the pair is unlikely to breach this area, thus remaining in the 105.80/106.60 range.
The US Dollar was trading in the same range against the Yen during the most of the session on Thursday.
The pair failed to move above the 106.40 mark, as the northern barrier was limited by the 55-, 100– and 200-hour SMAs and the weekly PP. As a result, the pair was pushed back to 106.00 during the Asian session. Given that this resistance is likewise reinforced by SMAs on the four-hour chart, it is expected that the Greenback fails to overcome this area today.
The most likely downside target should be the 2017 low of 105.35. Meanwhile, the pair might still go for a re-test of the 106.40 area.
Some volatility could be introduced in response to US Building Permits released at 1230GMT; however, the projected trading range is unlikely to be breached.
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