USD/JPY Outlook: Yen strengthens again on China virus risk-off mode

Slobodan Drvenica Windsor Brokers

USD/JPY

The pair weakened in early US trading on Friday, reducing hopes of stronger recovery, after strong downside rejection on Thursday signaled formation of bear-trap on Fibo support at 109.28 (38.2% of 107.65/110.29). Downbeat US Jan Manufacturing PMI was partially offset by better than expected Composite / Services figures, but near-term action remains biased lower on persisting fears of spreading corona virus that keeps safe-haven yen favored. Fading daily bullish momentum adds to negative outlook, but other indicators are mixed and lack clearer signal. Close below 109.28 pivot is needed to signal bearish continuation and neutralize risk of reversal on bear-trap pattern formation.

Res: 109.65; 109.88; 110.00; 110.29
Sup: 109.26; 109.15; 108.97; 108.65

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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