USD/JPY Analysis: sellers retain control despite the latest bounce

USD/JPY Current Price: 106.13

• Japanese yen seesawing at the rhythm of sentiment.
• Wall Street’s recovery helped the pair bounce from fresh multi-year lows.
• USD/JPY bounced roughly 200 pips but retains its bearish technical stance.

The USD/JPY pair bounced from a multi-year low of 104.44, surging roughly 200 pips to settle at around 106.10. The yen surged as risk aversion dominated the weekly opening amid mounting trade tensions and decreasing hopes for a deal Brexit. The dismal mood reversed after some positive comments from US President Trump that anyway were not backed by Chinese authorities. Still, the dollar recovered alongside Wall Street, while US Treasury yields remained in the green throughout the day. Japan released the final versions of the June Leading Economic Index, and the Coincident Index, which resulted as previously estimated at 93.3 and 100.4 respectively, while the US released July Durable Goods Orders, which rose by more than anticipated, further lifting the pair. During the upcoming Asian session, Japan will publish the July Corporate Service Price, seen at 0.5% vs. the previous 0.7%.

USD/JPY short-term technical outlook

Despite the nice comeback, the pair is still offering a bearish stance in its 4 hours chart, as it has been unable to recover beyond its 20 and 100 SMA, both heading lower and converging in the 106.10/20 price zone. Furthermore, technical indicators in the mentioned chart have corrected extreme oversold conditions, but stalled their recoveries just below their midlines, now gaining bearish traction. The bearish case could gain adepts on a break below the 106.00 level, while a break through 106.40 could see the advance extending toward 107.00 before sellers return.

Support levels: 106.00 105.70 105.25  

Resistance levels: 106.40 106.80 107.10

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