This fall was caused by BOJ Governor Kuroda’s comments in Davos where he claimed that Japan was getting close to its 2% target, thus putting upward pressure on the Yen. A test of the aforementioned channel was followed by a rebound back to the 55-hour within the Asian session. Technical indicators remain .
A possible upside target today could be the 100-hour and the weekly PP circa 109.40, while the nearest support is the distant weekly S1 at 107.50.
Following a strong period of decline during the previous sessions, the US Dollar managed to regain some of its lost positions on Monday. Gains, however, were largely limited due to the notable resistance of the 55– and 100-hour SMAs and the monthly S3 located nearby.
Technical indicators favour another fall towards the distant weekly S1 at 107.51 during this session. In case fundamentals fail provide strong upside momentum, this is the most probable scenario.
By and large, the US Dollar should soon accelerate against the Yen and return near the 109.60 mark where the upper boundary of a six-week descending channel is located.
USD/JPY has remained steady for the last three trading sessions. The main reason has been the pair’s inability to breach the strong support of the 55– and 100-hour SMAs that were located slightly below 109.00 at the time of the analysis. The overall trend, however, has been slightly upwards, as shows by the dashed line.
Given that the Greenback still remains weak against the Yen, bulls might fail to breach the 109.00 area, at least during the first part of the day. This situation could change later in the session when several noteworthy fundamentals are released.
A positive outcome should not exceed the 200-hour SMA at 109.62, while the opposite scenario might bring further decline for the US Dollar down to the 108.00 mark or the distant weekly S1 at 107.50.