Technical Analysis:
- USD/JPY bears firmly in control, break below 50-DMA has opened scope for further downside.
- The pair is consolidating overnight losses, hovers around 113 handle.
- Techs are biased lower, momentum studies are bearish.
- On the weekly charts, RSI and Stochs have rolled over from overbought levels and MACD line is on verge of a bearish crossover.
Fundamental Factors:
- US dollar was also sold off on Trump's comments that USD is too strong in comparison to the Yuan in particular.
- Trump stimulus and tax reform hopes diminishing by the day, US interest rates slip with the 10yr down 5bp to 2.347%.
- However, the Fed's assertive tightening projections plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar.
- Focus will be on U.S. economic data including CPI, industrial production, and the Beige Book.
- Trump’s inaugural speech on Friday could impact the markets.
TIME TREND INDEX OB/OS INDEX
1H Bullish Neutral
4H Neutral Neutral
1D Bearish Neutral
1W Neutral Neutral
Support levels - 112.96 (converged 1H 5&20 SMA), 112.60 (Jan 18 low), 112
Resistance levels - 113.80 (5-DMA), 113.97 (23.6% Fib of 98.78 to 118.66 rally), 114, 114.31 (50-DMA)
Recommendation: Good to go short on rallies around 113.10/30, SL: 114.10, TP: 112.60/ 112/ 111.35
