USD/JPY returns near weekly S1

FX:USDJPY   US-Dollar / Japanischer Yen
The US Dollar appreciated slightly against the Yen on Wednesday, thus returning near the 110 mark. The rate fluctuated around the given line, but failed to form a distinctive wave north. The expected move upwards may be realised in this session, as the Greenback should approach the upper boundary of either a senior or a junior channel down.

Given the relatively stable move sideways, the former is likely to be breached this week. Along the way, the pair faces a resistance set by the 55-hour SMA and a cluster of the 100– and 200-hour SMAs circa 110.30 and 110.50, respectively. In case the 55-hour SMA is breached, the latter should halt the pair for the following 24 hours, leaving it in the 110.20/40 area.

Traders should keep in mind that three sets of important data are released today.
Trade geschlossen: Stop wurde erreicht:

Contrary to expectations, USD/JPY realised its downside potential, falling down to 109.00 mark.

The pair breached the lower boundary of a three-week channel (apparent on the main picture) and, consequently, edged below the weekly S2 at 109.33.

The given move has formed a more steeper channel down. The downside momentum has allayed, giving room for some upside potential that may be realised in this session. The given assumption is supported by technical oscillators being in the oversold territory and other indicators—at historical lows.

Nevertheless, down-trend is still strong.

The nearest support formed by the monthly S1 and the weekly S1 at 108.81/82 could be an unbreakable limit, thus guiding the pair towards the upper boundary of the junior channel circa 109.40.

The US Dollar was relatively flat against the Yen on Friday, thus remaining in the 109.00/20 area for the whole session. The given lack of momentum changed this morning when the rate managed to reach the weekly PP at 109.62.

The steepness of the downtrend has shifted north, as apparent from the rate’s inability to reach the lower channel boundary. Thus, the formation of a junior channel down was confirmed.

Taking into account bullish technical indicators, the upside limit for this session may be set at the upper boundary of either the senior or junior channel circa 109.80 and 110.20, respectively. The latter is also supported by the 200-hour SMA.
Trade geschlossen: Ziel wurde erreicht: During the last trading session, the US Dollar managed to recover some losses against the Yen, as political tensions in the Korean peninsula eased. The rate surpassed all three SMAs and the weekly PP just to reach the weekly R1 at 110.51. In addition, the pair managed to breach two descending channels.

The weekly R1 is likely to be a turning point, as technical indicators seek to retrace from the current levels. In case strong fundamental data do not put an upward pressure on the Dollar, the American currency may range between the weekly R1 and PP in this session.

Possible downside limit could be either the 200-hour SMA or the upper boundary of the senior channel down.
Kommentar: Following a breach of the upper line of the junior channel, the US Dollar continued to appreciate against the Yen near the weekly R1. Further potential upwards was strengthened by solid data mid-session that resulted in a surge up to the 110.80 mark.

Subsequently, the rate resumed its up-trend until early morning when the lack of market volatility guided the Greenback sideways.

This change in sentiment together with worsening technical indicators demonstrate that the rate is likely to fall today, possibly seeking to retrace from the upper channel line circa 110.00. The 55– and 200-hour SMAs are located near this area.

Meanwhile, in case of appreciation, the upside limit is set at the monthly PP at 111.66.

After reaching the 111.00 mark early on Wednesday, the US Dollar plunged for the remaining session. As a result, the rate breached the weekly R1 and all three SMAs and reached the 109.60 area this morning.

The above fall set trend indicators in the strongly bearish territory, demonstrating that further momentum downwards may still occur. The failure to move above the 200-hour SMA should work as a confirmation that the rate is set to fall.

Nevertheless, this movement south has allayed slightly near the weekly PP. It is therefore expected that the rate remains above the given line and might even try to return near the weekly R1.
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