USD/JPY outlook: China's countermeasures deepen tensions and boost safe-haven demand

Slobodan Drvenica Windsor Brokers

USD/JPY

The pair accelerated lower in Asia on Friday and extend weakness in early European trading, registering drop of 0.6% and marking yen as top gainer of the session.
Fresh weakness generated negative signal on break of the floor of two-week congestion (106.65) and Fibo support at 106.44 (50% retracement of larger 101.18/111.71 ascend). Bears focus key supports at 106.07 (23 June low) and 105.98 (6 June low) break of which could spark stronger bearish acceleration and expose key Fibo support at 105.20 (61.8% of 101.18/111.71).
Daily studies are in firm bearish setup and support the action, however, bears may hesitate to break lower on first attempt and consolidate before resuming lower.
Fresh strength of safe-haven Japanese yen was sparked by China's countermeasures that deepened political tensions between two countries, while dollar remains under strong pressure on rising new Covid-19 cases and strengthening Euro on improved sentiment in the Eurozone after leaders agreed on massive stimulus package.

Res: 106.65; 106.88; 107.00; 107.20
Sup: 106.07; 105.98; 105.50; 105.20

Interested in USD/JPY technicals? Check out the key levels

1. R3 107.68
2. R2 107.45
3. R1 107.16
PP 106.94
1. S1 106.64
2. S2 106.42
3. S3 106.13

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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