USDJPY: Go with the flow after the CPI
|| 24 Hour: Neutral | Medium Term: Neutral |
US$Jpy remains under heavy pressure, not helped today by the move in US stocks, breaking down below the April/June rising trend support and heading to a low of 109.15 and closing near the lows ahead of today’s Japan holiday and the US CPI outcome later in the day.
The momentum indicators are now mixed so some caution is warranted, and a session of chopping around either side of 110.00 would not surprise until traders see something to provide a more directional move.
A soft CPI result could quickly run to 109.00 and to 108.80 (Weekly Cloud Base), which should be decent support at the first attempt. A Friday close below 108.80 would be ominous for the dollar and would suggest a run towards the April low of 108.12, and further out, towards 107.80/50.
On the topside, minor resistance will arrive at 109.50, beyond which there is scope to head back to 109.80, to 110.00 and to the session high of 110.17. Further resistance would arrive at 110.40 and as we said before, a close above 111.05 would be necessary to ease concerns on the downside and would then allow a move towards resistance at the 200 WMA at 111.25 and then to 111.40 (100 DMA).
Preferred Strategy: Neutral. Go with the flow after the CPI.
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