USD/JPY Unable to Extend Recovery, Dips Back Below 107.00
The USD/JPY
pair's early Asian session spike to 107.45 got sold into and the pair
has now dropped back below 107.00 handle, shattering traders’
expectations of extending Tuesday's recovery.
After being
butchered to its lowest level since Oct. 2014, the pair seems to have
some support at lower levels. On Tuesday, the pair witnessed a sharp
short-covering rally that extended during early Asian session on
Wednesday. The pair, however, failed to build on to the early momentum
and erased majority of its gains to currently trade near 106.85 level.
As
the intensity of US Dollar selling seems to have diminished ahead of
the US ADP jobs report and ISM non-manufacturing PMI, the pair seems
more likely to stabilize at current levels. For the day, only a
break-out from Wednesday's trading range would trigger the next leg of
move for the pair.
Technical levels to watch
Below
today's low of 106.50, traders would be eying Friday's closing low
level support near 106.35 level. A sustained weakness back below
Friday's close now seems to trigger a fresh bout of selling pressure,
which could drag the pair back towards 105.55-50 support area.
On
the upside, strength above 107.00 mark might continue be capped at
day's high resistance near 107.45-50 area, which if cleared should set
the stage for additional recovery towards 107.85-95 area. A clear
break-through this 108.00 resistance area now seems to trigger a sharp
short-covering rally back towards 109.45-50 strong resistance zone.
