- A combination of factors helped the USD / JPY gain some positive traction on Friday.
- A softer USD prevented the bulls from making aggressive bets and limited gains for the pair.
- Acceptance below 109.00 could have set the stage for further weakness.
The pair USD/JPY it traded with a slight positive bias during the early North American session, although it lacked follow-up and remained capped below the 109.00 level.
The prevailing risk appetite undermined demand for the Japanese yen as a safe haven. The bulls were also inspired by a solid rally in US Treasury yields. That said, a softer tone around the US dollar limited the rise in the USD / JPY pair.
From a technical perspective, 109.00 marks a confluence support break point comprising the 200-period SMA on the 4-hour chart and the 23.6% Fibonacci level of the strong move up from 102.59-110.97. . This should now act as a fundamental point for traders.
Meanwhile, the technical indicators on the 4-hour chart maintained their bearish bias and have just started to move into negative territory on the daily chart. The setup supports prospects for an extension of the recent pullback from the one-year highs.
From current levels, immediate support is tied to the horizontal level of 108.35. Some subsequent selling should pave the way for a drop towards the challenge of the 108.00 round digit mark, en route to the 38.2% Fibonacci support level, around the 107.75 region.
On the other hand, a sustained move past 109.00 could trigger some short coverage move. The USD / JPY pair could rise to intermediate resistance at 109.35-40 before the bulls eventually point back to regain the key psychological mark of 110.00.
4 hour chart
Technical levels
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