USD/JPY Unable to Extend Recovery, Dips Back Below 107.00
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.