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USD/JPY has been capped as expected at its 55-day average and 38.2% retracement of the fall from March at 107.01/06 and analysts at Credit Suisse look for the risk to turn lower. The pair remains depressed near 106.70-75 area, snapping four consecutive days of the winning streak.

Key quotes

“We continue to look for the recovery to stall here and for the immediate risk to shift lower again. Support is seen at 106.43 initially, then 106.25/20, which we look to try and hold at first. Below 105.93 though is needed to ease the immediate upside bias with support then seen next at 105.70, with a break here needed for a retest of 105.33/27.” 

“Should strength extend above 107.06 we see resistance next at the late July high at 107.53, then the 50% retracement at 107.95, with more important resistance seen not far above at the 200-day average and downtrend at 108.13/17.”