USD/JPY Forecast: Re-test of Thursday’s high likely

The Dollar-Yen pair rose to a high of 112.42 on Thursday before the broad based USD selling in the NY session pushed the pair down to 114.48; the lowest level since June 27. The US-Japan 10-year yield remained stagnant at 2.19. 

Technicals 

Resistance:

• 112.14 (1-hour 100-MA)
• 112.42 (previous day’s high)
• 112.74 (10-DMA) - 112.78 (1-hr 200-MA)

Support: 

• 111.82 (4-hour 200-MA + 200-DMA)
• 111.48 (previous day’s low)
• 110.98 (61.8% Fib R of 108.80-114.49)

Daily chart

Observations:

• Spinning bottom at 200-DMA support
• Dips below 200-DMA have been short lived
• The 14-day RSI is bearish below 50.00 levels

1-hour chart

Observations:

• Potential rounding bottom formation
• 50-MA & 100-MA have bottomed out

Comments

• Persistent demand below 200-DMA suggests scope for re-test of the previous day’s high of 112.42. The gains could be extended to 10-DMA level of 112.75, although the rally may not be sustained… given the daily RSI is bearish and the US-Japan 10-yr yield has re-entered falling channel as seen on the chart below. 
• Only an end of the day close below 111.78 would signal continuation of the sell-off from the recent high of 114.49 levels.