Bottom line: USDJPY long term structure remains bearish against 112.22 levels. Bulls might be inclined to push towards 108.30 levels in near future though. The currency is expected to resume lower, thereafter.

 Fundamental Outlook:

NZDUSD had raised through 0.6600 mark last week before facing an increased selling pressure. The exchange rate is trading lower at 0.6550/55 as we prepare to publish the update. With rising trade war situation between US-China, COVID-19 pandemic rising again, the risk related currency NZD might be exposed to further downside.

USDJPY had rallied towards 107.31 before reversing, and closed lower towards 106.92 levels. The US Dollar has come under pressure since the last 2 trading sessions, as risk appetite returned. Global Indices managed to rally along with the EURO against the safe haven US Dollar.

SPX500 futures has rallied over +2.3% in the past 2 trading sessions. The indice managed to print 3241 intraday before closing at 3230 yesterday. Hopes over the COVID-19 vaccine developments from Moderna has kept the investor sentiment upbeat, pushing risk assets higher.

Technical Analysis:

USDJPY might be preparing to rally towards 108.30 levels before finding resistance again. Please note the structure continues to remain bearish until prices stay below 109.85 levels, the immediate resistance.

USDJPY has dropped from 112.22 through 101.18 levels, breaking out of a triangle consolidation earlier. Since then, the currency has been trading within a range between 106.00 and 110.00 respectively. A break on either side is required to decide upon the next big move.

USDJPY might be retracing after recent drop from 109.85 through 106.00 respectively. The fibonacci 0.618 retracement is seen towards 108.30. Hence probabilities remain high for a bearish reversal, if prices manage to reach there.

Most traders might be preparing to initiate fresh short positions around 108.00/30 mark, with a protective stop above 109.85 and project targets below 101.18, going forward. Only a break above 109.00 would change the above structure.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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