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  • USD/JPY failed to capitalize on attempted recovery move, rather met with some fresh supply.
  • The near-term technical set-up warrants some caution before placing any fresh bearish bets.

Having failed to find acceptance above the 111.00 mark, the USD/JPY pair met with some fresh supply and drifted into the negative territory for the third consecutive session on Tuesday. The downfall has now dragged the pair back closer to the overnight swing low, around the 110.35 region.

The mentioned support coincides with 50% Fibonacci level of the 108.31-112.23 positive move. A convincing break through might be seen as a key trigger for bearish traders and set the stage for an extension of the recent sharp retracement slide from multi-month tops set last week.

Meanwhile, technical indicators on the daily chart have been correcting from higher levels, albeit have still managed to hold in the bullish territory. The set-up warrants some caution before positioning for any further near-term depreciating move amid some stability in the global financial markets.

On the flip side, the 111.00 round-figure mark might continue to act as immediate strong resistance and prompt some selling. That said, some follow-through strength might negate the negative bias and trigger a short-covering move towards 23.6% Fibo. level – around the 111.25-30 region.

USD/JPY daily chart

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