USD/JPY has suffered a slight setback in the early hours of Monday trade, with the exchange rate reaching a session low of 112.10 from 112.42 NY close last Friday, before an attempt to recover its footing and fill the gap, last at 112.30.
Double-whammy for Yen crosses
The twofold drivers behind the tentative strength in the Japanese Yen in early Asia are, firstly, the defeat by Japanese Prime Minister Abe's Liberal Democratic Party in the Tokyo Metropolitan Assembly election, which undermines his prospects on a nationwide election result; secondly, weighing on the Yen crosses is a Bloomberg story on Nobuyuki Nakahara, former BOJ board member & adviser to PM Abe, who stated that Governor Kuroda should not be reappointed as Bank of Japan Governor.
Valeria Bednarik, Chief Analyst at FXStreet, notes: "From a technical point of view, the daily chart for the pair maintains a bullish bias, as technical indicators advance above previous highs and near overbought levels, although the price was unable to settle above a bullish 200 SMA, currently at 112.60. A stronger resistance comes at 112.90, where the pair topped for the week and the 23.6% retracement of its latest bullish run."
"In the 4 hours chart, the 100 SMA has crossed above the 200 SMA, both in the 111.000 region, while technical indicators turned lower within positive territory, suggesting the pair may need to surpass the mentioned high to gain enough upward strength to extend its advance", Valeria added.