- Bounces-off a dip to 5-DMA at 112.64, as US dollar finds support from the Yuan sell-off.
- Bulls looking for a test of Wednesday’s high at 113.14 on upbeat US Philly Fed manufacturing gauge.
USD/JPY is seen extending the bounce from the 5-DMA support at 112.65 and now looks to retest the 113 handle, as the Japanese currency stalled its recovery-mode and resumed the decline heading into the European opening bells.
The latest leg higher in the spot can be also attributed to the renewed US dollar demand, as the sell-off in the Chinese Yuan helps lift the bid tone around the buck. The USD/CNY pair hit fresh yearly tops at 6.7477 amid hawkish Fed and US-China trade tensions.
Earlier in Asia, the pair extended its corrective move lower from six-month tops of 113.14, after the Yen found some support from better Japanese trade figures and BoJ’s routine QE adjustment. Meanwhile, oversold conditions around the JPY on the technical charts also offered some respite to the JPY bulls.
Looking ahead, the major remains poised to regain the 113 handle and could test the 2018 high of 113.39 should the US Philly Fed manufacturing gauge beat estimates of 22.0.
USD/JPY Technical Levels
FXStreet’s Analyst Omkar Godbole, noted: “The pair risks bearish doji reversal and hence could drop to 111.40 (May 21 high) soon. The MAs are biased towards the bulls. Hence, I am unable to rule out the probability of a solid rebound from 112.00. A deeper pullback could bode well as it would help recharge the engine for a convincing break above 113.27/28 (200-week moving average + 61.8% of 2017-18 slide).”
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