USD/JPY eases after touching a 3-week high of 110.85.

USD/JPY has come under renewed selling pressure today, falling below the three-week high of 110.85, achieved during Wednesday’s US session. The price failed to end the previous candle in green and fell once again below the 200-day simple moving average (SMA) in the near term.

Looking at momentum oscillators on the daily chart though, they suggest further declines may be on the cards in the short-term. The RSI is above its neutral 50 line, detecting negative momentum, and is also pointing downwards. The %K line of the stochastic oscillator posted a bearish cross with the %D line, suggesting further losses are nearing. Additionally, the 20-day SMA is turning slightly lower approaching the 40-day SMA for a negative cross in the next few days.

Should the pair manage to strengthen its negative momentum, and fall below the moving averages and the 38.2% Fibonacci retracement level of 109.90 of the down-leg from 118.60 to 104.60, the next support could come around the 108.65. This area has been a strong obstacle in the past as the price failed to have a closing day below it in the last one-and-a-half month. A break below 108.65 would shift the short-term bias to a more bearish one and open the way towards the 108.10 mark. Below this level, the next target could come in the 107.80 – 107.90 region. The latter level is the 23.6% Fibonacci region.

However, if the prices are unable to dive below the 38.2% Fibonacci, the risk would shift back to the upside in the near-term with the 110.85 resistance coming into focus. A jump above this zone would signal a resumption of the latest uptrend that’s has been developing since the rebound on the 104.60 support. The next key resistance to watch is the 111.40 barrier.

Broadly, USD/JPY has been trading within a downward sloping channel since December 2016, with a break outside is likely to determine the next trend direction.

USD/JPY 14 June 18 | EconAlerts



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source: XM

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