- USD/JPY edges lower for the second consecutive session on Wednesday.
- Dip-buying near 200-DMA is likely to help limit any meaningful downside.
The USD/JPY pair continued with its struggle to make it through the 109.70-75 region, or multi-month tops set earlier this December and retested last Friday, and witnessed a modest pullback on Tuesday. The pair extended its overnight pullback and remained depressed for the second consecutive session on Wednesday.
Meanwhile, the downtick has been along a descending trend-channel formation on short-term charts and support prospects for a further decline amid reviving safe-haven demand. This coupled with the fact that oscillators on the daily chart have started gaining negative traction further reinforce the negative outlook.
However, technical indicators on 4-hourly/daily charts have still managed to hold with a bullish bias and thus, warrant some caution before placing any aggressive bets for any further depreciating move. The lower end of the mentioned trend-channel, around the 109.40 region, is likely to protect the immediate downside.
This is followed by support near the very important 200-day SMA, around the 109.00-108.90 region, which if broken might be seen as a key trigger for bearish traders and prompt some fresh technical selling. The pair then is likely to accelerate the slide further towards testing the 108.50-45 strong horizontal support.
On the flip side, bulls are likely to wait for a sustained move beyond the 109.70-75 supply zone, above which the pair seems all set to surpass the key 110.00 psychological mark. The momentum could further get extended towards another ascending trend-line extending from early August – currently near the 110.30 region.
USD/JPY 1-hourly chart
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