FxWirePro: USD/JPY slumps to multi-month lows, holds above 107 handle, break below to see further weakness

• USD/JPY slumps to multi-month lows below 107 handle, bias still bearish.
  
• Broad-based US dollar weakness and strength in the Yen as risk-aversion seeps back into markets weighing heavily on the major.
  
• Price has slipped below weekly cloud and is on track to test 1M 200-SMA at 105.71.
  
• We see minor support at 106.73 (14th Nov weekly low). Break below finds next strong support at 106.37 (converged trendline and 61.8% Fib retrace of 98.787 to 118.662 rally).
  
• Technical studies are highly bearish, RSI and stochs point south and we see -ve DMI dominance.
  
• Caution seen in the markets ahead of the key US CPI figures due to be released today at 13:30 GMT.
  
• Inflation data is seen as the key to shape up the Fed’s rate hike outlook this year.

Support levels - 106.73 (14th Nov weekly low), 106.37 (converged trendline and 61.8% Fib retrace of 98.787 to 118.662 rally)

Resistance levels - 108.17 (5-DMA), 109.27 (20-DMA)

Call update: Our previous call (http://www.econotimes.com/FxWirePro-USD-JPY-hovers-around-strong-trendline-support-at-10840-good-to-go-short-on-break-below-1146888) has hit all targets.

Recommendation: Book partial profits. trail stop loss to 108.20, hold for 106.75/ 106.40.

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