- USD/JPY stalls downside, as US dollar attempts a bounce.
- Risk-on rally in equities and stock futures underpin.
- A minor correction cannot be ruled out ahead of US data.
USD/JPY is consolidating a sharp correction from two-month highs of 108.85, as the bears lick wounds around the midpoint of the 108 handle.
The spot, currently, loses 0.12% to trade at 108.52, having hit a daily low of 108.43 in the last hour. An extension of the corrective mode to the downside cannot be ruled out in spot, given the upsurge following a technical breakout on Tuesday.
The ongoing optimism over the global economic recovery and the resultant risk-on rally in the equities emerged as the main driver for the recent rally in USD/JPY.
The bullish growth narrative combined with the technical breakout on the hourly chart helped the major breakthrough the two-week long-range trade.
However, the latest leg down in the pair could be likely associated to the relentless selling seen in the US dollar across the board, as the risk-on mood dampens the safe-haven appeal of the greenback.
Moreover, the yen picked up a small bid on the reports that the Bank of Japan (BOJ) is considering doubling the financial aid for the small business hit by the coronavirus pandemic, collaborating with the USD/JPY drop.
Over the last hour, the rates have stabilized amid a tepid bounce attempted by the greenback across its main competitors, with the US dollar index back above 97.50 from fresh three-month lows of 97.41.
Attention now turns towards the US ISM Services PMI and Factory Orders data for further incentives while risk trends will continue to have a major bearing on the spot.
USD/JPY technical levels to watch
To the downside, the next supports are aligned at 108.39 (200-DMA), 108.20 (former resistance) and 108.04 (5-DMA). Should the bulls regain poise, the two-month highs will be retested en route 109.00 (round number) and 109.14 (classic daily R1).
USD/JPY additional levels
|Today last price||108.50|
|Today Daily Change||-0.19|
|Today Daily Change %||-0.17|
|Today daily open||108.68|
|Previous Daily High||108.77|
|Previous Daily Low||107.52|
|Previous Weekly High||107.95|
|Previous Weekly Low||107.08|
|Previous Monthly High||108.09|
|Previous Monthly Low||105.99|
|Daily Fibonacci 38.2%||108.29|
|Daily Fibonacci 61.8%||108|
|Daily Pivot Point S1||107.87|
|Daily Pivot Point S2||107.06|
|Daily Pivot Point S3||106.61|
|Daily Pivot Point R1||109.13|
|Daily Pivot Point R2||109.58|
|Daily Pivot Point R3||110.39|
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