- USD / JPY is struggling to capitalize on its modest intraday rally amid renewed selling bias around the dollar.
- Risk appetite weighs on the safe-haven JPY and could help limit any further losses.
- A slightly overbought RSI could trigger a deeper corrective dip somewhat.
The USD / JPY pair has returned a significant portion of its intraday gains to the 113.60 region and is down around the 113.30-35 region.
The US dollar has been under renewed selling pressure during the early part of the European session and has extended the fall of the previous day’s retracement from 13-month highs. This, in turn, has been seen as a key factor acting as a headwind for the USD / JPY pair, although risk appetite has weighed on the safe-haven Japanese yen and helped limit any losses. deeper.
Looking at the technical picture, the recent strong positive momentum from near the 109.00 level has stopped near a resistance marked by the upper bound of a bullish channel. The RSI on the daily chart is still in the overbought territory, which could set the stage for a deeper pullback for the USD / JPY pair.
With that said, the lack of any significant declines warrants some caution before confirming that the USD / JPY has reached a short-term high and positioning for any further bearish movements. From current levels, the round level of 113.00 appears to act as immediate strong support, which if decisively broken should trigger an aggressive technical selling.
The USD / JPY pair could accelerate the slide towards the test of the next relevant support near the horizontal zone of 112.25-20. Any subsequent decline could still be seen as a buying opportunity and remain limited near the round 112.00 level.
On the other hand, the 113.55-60 region now appears to have emerged as a strong immediate resistance, above which the USD / JPY pair could challenge the trend channel barrier just below the 114.00 level. Some continuation buying will be seen as a new trigger for the bulls and will pave the way for an extension of the multi-week-old uptrend.
USD / JPY 4-hour chart
USD / JPY technical levels
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