USD/JPY Seems Vulnerable Below Session Low of 109.30

USD/JPY Seems Vulnerable Below Session Low of 109.30

23 May 2016, 15:25
Roberto Jacobs
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USD/JPY Seems Vulnerable Below Session Low of 109.30

The recent USD/JPY pair's recovery from multi-month lows failed to sustain its momentum beyond 50-day SMA, dragging the pair back below the mid-point of 109.00 handle.

The recent US Dollar rally against the Japanese counterpart seems to face strong headwind as despite of weak internals from the Japanese trade balance data, the global risk-off sentiment seems dent demand for the greenback. The latest Japanese trade balance data showed a higher-than-expected surplus of 823.5B. The boost in trade surplus, however, came from a sharp decline in imports. Furthermore, fall in exports turned the trade data even uglier when compared to the headline surplus figure.

From technical perspective, the pair is reversing after failing to sustain its momentum above 50-day SMA. A follow through selling pressure back below 109.35-30 support would be the first signal that the pair might be done with its near-term recovery and could resume its prior downward trend.

Technical levels to watch

On the immediate downside, 109.35-30 zone seems to provide some immediate support, below which the pair seems to drift back towards 108.40 with 109.00 round figure mark acting as intermediate support.

On the upside, 50-day SMA (currently near 110.00 region) remains immediate resistance to be conquered. On a sustained break through this immediate resistance should now pave way for extension of the pair's near-term recovery trend, beyond 111.00 round figure mark resistance, towards 111.30-40 resistance area.

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