USD/JPY daily overview

FX:USDJPY   U.S. Dollar / Japanese Yen
Despite attempts to edge higher during the previous two trading sessions, the US Dollar failed to overcome the 200-hour SMA and thus entered a minor period of consolidation. This has resulted in the formation of a short-term ascending channel (drawn with dashed lines). The downside limit during this time has been provided by a seven-week channel up.

Early on Tuesday, the Greenback was restricted by the the 55-hour SMA at 109.10. If this level is surpassed, another strong barrier—the 100– and 200-hour SMAs—are limiting an advance above 109.40. In terms of support, the weekly S1 is located at 108.45.

Technical indicators show mixed results for this session, suggesting that the general direction of the pair could remain sideways in this session if no fundamentals disrupt this assumption.
Tuesday’s trading session was spent in a calm manner for the USD/JPY exchange rate, as it remained pressured to the downside by the 200-hour SMA. Meanwhile, support was provided by the lower boundary of a seven-week channel.

This lack of movement shifted dramatically during the Asian session when the pair shot up 51 pips within two hours, thus instantly breaching the 55-, 100– and 200-hour SMAs and the weekly PP. This move stopped near the short-term channel circa 109.60. It is expected that this surge leaves the rate stable for a couple of hours.

Meanwhile, given the strong support cluster formed by the breached moving averages, the US Dollar should maintain its northern direction in this session. Upside takrget for today is the 110.00 mark.
The strong two-hour surge on Wednesday morning was followed by a period of consolidation slightly below the weekly R1. This lack of direction was also maintained during this Asian session.

In general, the US Dollar managed to move away from the bottom boundary of the seven-week channel up. The pair’s consolidation allows to think that the rate might be ready for a minor correction south today.

However, this fall should not be significant, as the 109.20 area is supported by the 55-, 100– and 200-hour SMAs and the 50.0% Fibo retracement. It is unlikely that bears manage to breach this strong support cluster, thus leaving the rate near 110.00 early on Friday.

In case the bullish sentiment prevails, the pair is to target the weekly R2 at 110.60.


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