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  • USD/JPY failed to capitalize on its early uptick to three-day tops, around the 107.75 region.
  • Bears might now wait for some follow-through selling below the 107.40 confluence support.

The USD/JPY pair retreated around 20-25 pips from three-day tops and has now dropped moved closer to the lower end of its daily trading range, around mid-107.00s.

Despite the pullback, the pair has still managed to hold above the 107.40 confluence support. The mentioned level comprises of 200-hour SMA and the 38.2% Fibonacci level of the recent bounce from the vicinity of the 106.00 round-figure mark.

A convincing breakthrough will be seen as a fresh trigger for bearish traders and set the stage for a fall towards the 107.10 region (50% Fibo. level). The downfall could get extended towards the next major support near the 106.80 horizontal zone.

Some follow-through weakness will negate prospects for any further near-term appreciating move. The pair might then turn vulnerable and accelerate the slide further towards challenging the 106.00 mark, or multi-month lows set on June 23.

On the flip side, the 107.65-70 region – around 23.6% Fibo. level – now seems to have emerged as immediate strong resistance. A sustained strength beyond should assist the pair to aim towards reclaiming the 108.00 round-figure mark.

USD/JPY 1-hourly chart

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Technical levels to watch