Currently, USD/JPY is trading at 113.37, down -0.67% or (77)-pips on the day, having posted a daily high at 114.31 and low at 113.12.
Yesterday's roaring US data was not enough to allow the greenback to make a clean break above the always relevant 50-DMA resistance and as a consequence, the pair was stabbed at 114.94 handle. Furthermore, the US dollar index experienced the same faith as the buck challenged its moving average and could not trade pass 101.36 after clocking a weekly high at 101.74.
As expected, the American dollar vs. Japanese yen is under selling pressure as market participants triggered a healthy 'profit taking' due to the mixed position among Federal Reserve members that cannot align their 2017 hike expectations. On the other hand, if Trump's 'phenomenal tax' does not strike in the next 2-weeks or fails miserably to impress, then that could be the catalyst to trigger a massive dollar sell-off.
On the last minute, the US generic government 10 Year Yield, erased 1% in losses that pull the greenback from the ground.
Historical data available for traders and investors indicates during the last 7-weeks that USD/JPY pair had the best trading day at +1.76% (Jan.18) or 201-pips, and the worst at -1.65% (Jan.05) or (190)-pips.
Technical levels to consider
In terms of technical levels, upside barriers are aligned at 114.99 (50-DMA) - yesterday prices failed to close and open above the level - and above that at 116.85 (high Jan.11). While supports are aligned at 112.85 (low Feb.10), later at 110.70 (100-DMA) and below that at 107.40 (200-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to drift lower and head south. Therefore, there is evidence to expect further US dollar losses in the near term.
On the long term view, if 118.59 (high Jan.1) is in fact, a medium-term top, the upside seems limited for the pair at 115.55 (short-term 61.8% Fib). To the downside, supports are aligned at 111.64 (long-term 50.0% Fib), then at 109.19 (short-term 38.2% Fib) and finally below that at 105.26 (short-term 23.6% Fib). Also, 112.37 (short-term 50.0% Fib) would be a new support as long as prices close above it.