- USD/JPY quickly reversed an early dip to 200-DMA, sub-109.00 level.
- The technical set-up support prospects for further appreciating move.
Following an early dip to sub-109.00 levels, the USD/JPY pair regained positive traction and added to the previous session's strong gains. The pair climbed further beyond mid-109.00s and has now moved back closer to six-month tops set earlier this December.
Against the backdrop of the overnight rally, emergence of dip-buying near the very important 200-day SMA now seems to support prospects for additional gains amid renewed optimism over the US-China trade deal, which tends to weigh on the JPY's safe-haven status.
Meanwhile, oscillators on the daily chart have been gaining positive momentum and are still far from being overbought conditions, which add credence to the pair's constructive outlook, though overbought conditions on hourly charts warrant some caution.
Hence, some follow-through buying has the potential to lift the pair towards the key 110.00 psychological mark. Any subsequent positive move is likely to confront stiff resistance and remain capped near an ascending trend-line extending from early August.
On the flip side, any meaningful pullback might continue to attract some dip-buying near the 109.00-108.90 region (200-DMA), which if broken might prompt some long-unwinding trade and accelerate the slide back towards the 108.50-45 strong horizontal support.
USD/JPY daily chart
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