This strongly sentiment during the first part of the day has sent technical indicators in the oversold area. Thus, it is likely that bulls use this opportunity to re-gain some of their lost positions. This expected advance should be limited by the 55– and 100-hour moving averages and the weekly PP circa 109.00.
The strong bearish pressure that dominated the USD/JPY exchange rate on Tuesday continued to prevail in this session, as well.
The pair showed some signs of a recovery during yesterday evening; however, the unsuccessful test of the weekly S1 at 107.78 sent the pair for a further plunge down to the weekly S2. As a result, the Greenback reached a new 2017/2017 low of 106.85.
Technical indicators have been sent in the strongly oversold area; thus, a possible recovery up to the 55– and 100-hour SMAs near 108.50 might be due in the nearest time. However, bears could likewise be reluctant to abandon their positions and therefore continue pressuring the US Dollar lower down to the bottom boundaries of two descending channels near the 106.00 area.
Despite a brief attempt to appreciate against the Japanese Yen on Wednesday morning, the Greenback continued to be driven by downside risks for the second consecutive session.
By Thursday morning, this bearish momentum had resulted in the pair reaching a new 2016/2017 low of 106.25. If looking at the chart, some southern potential down to the 106.00 mark is still apparent—a level where the bottom boundaries of two prevailing descending channels are located. In terms of pivot points, the nearest support is provided by the weekly S3 at 105.55.
Following such a steep two-day decline, the US Dollar should start recovering in the nearest time. Even if the bearish sentiment prevails today, the expected advance is expected to happen on Friday.
Bears have managed to take advantage of the weaker US Dollar, thus pushing USD/JPY to a new 2017/2018 low of 105.70 As a result, the pair was testing the weekly S3 and the lower boundary of two prevailing two-month channel on Friday morning.
Technical indicators suggest that the current movement south could prevail today, as well, thus sending the pair for a test of the senior channel circa 104.50. Given that the weekly S3 and the monthly S2 are located along the way, this decline might be limited to 105.00. Meanwhile, resistance is provided by the 55– and 100-hour SMAs, the weekly S2 and the monthly S1 in the 106.62/107.35 territory.
If US Building Permits released at 1330GMT do not introduce massive volatility in the market, the pair could trade sideways in this session.