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USD/JPY : Rebound Might Be Short Lived

(Fri, 27 June 2020). USD/JPY sell-off responds to technical support at 106.31. Broader risk remains for a deeper correction while below yearly open resistance. The Japanese Yen is poised to snap a two week winning streak against the US Dollar with USD/JPY virtually unchanged on Wednesday after rebounding off technical support. While the threat of a broader decline remains, the immediate sell-off may be vulnerable here and a near-term recovery may offer more favorable opportunities.

 

JAPANESE YEN PRICE CHART – USD/JPY WEEKLY

Notes: In last month’s Japanese Yen Weekly Price Outlook we highlighted critical resistance, “at the 61.8% retracement of the late-March decline / 2019 open at 109.53/68 – look for a larger reaction there for guidance.” The Dollar ripped higher into the open of June trade with a rally of more than 2% failing to close above this key threshold (intraday high registered at 109.85). Price turned sharply lower with the decline now testing the 61.8% extension of the March decline at 106.3- a weekly close below this threshodl is needed to keep the immediate short-bias viable in the days ahead.

Weekly resistance now stands at the 61.8% retracement of the monthly range / 2020 yearly open at 108.40/62 backed by 109.53/68- a close above this threshold is needed to shift the broader focus back to the long-side. A break lower from here exposes subsequent support objectives at 105.20 backed by the 2018 low at 104.62 and the 100% extension at 104.12.

Bottom line:

The Japanese Yen has covered the last two-month’s range in just the past few three weeks and the focus is on this support zone near the May lows in USD/JPY. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – look for topside exhaustion ahead of yearly open resistance at 108.62 on recoveries IF price is indeed heading lower with a break below exposing key Fibonacci support.

 

 

 

  

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