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FxWirePro: USD/JPY finds strong support at 20-DMA (113.40), good to go short on break below

  • USD/JPY slips lower on renewed risk-off, down 0.28% on the day.
     
  • Comments from the Chinese President Xi, who talked up the prospects of boosting the country’s trade and imports with the US triggered risk-off moods, lifting the safe-haven Yen.
     
  • Also, uncertainty around the US tax reforms keeps the US dollar on the back foot, collaborating to the weakness in USD/JPY.
     
  • The pair is currently hovering around strong support at 20-DMA at 113.40. We see weakness on break below.
     
  • Technical studies have turned bearish. RSI and Stochs are biased lower.
     
  • Focus on the US tax reforms, which is expected to have a significant impact on the USD price-action.
     
  • On the flipside, major resistance seen at 114.45. We see bearish invalidation only on break above.

Support levels - 113.40 (20-DMA), 112.98 (23.6% Fib retrace of 107.318 to 114.73 rally), 112.16 (50-DMA)

Resistance levels - 113.81 (5-DMA), 114, 114.45 (trendline)

Recommendation: Good to go short on break below 20-DMA, SL: 113.85, TP: 113/ 112.50/ 112.20.

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -117.496 (Bearish), while Hourly JPY Spot Index was at 101.591 (Bullish) at 0840 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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