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Talking Points:
- USD/JPY Technical Strategy: Flat
- Support: 114.06, 113.13, 111.61
- Resistance: 115.29, 116.60, 117.67
The US Dollar may be preparing to move downward against the Japanese Yen after prices put in a Bearish Engulfing candle pattern. A daily close below the 14.6% Fibonacci retracementat 114.06 exposes the 23.6% level at 113.13. Alternatively, a turn above the 23.6% Fib expansion at 115.29 clears the way for a challenge of the 38.2% threshold at 116.60.
While entering short appears compelling from a technical perspective, we will tactically opt to stand aside for now. USDJPY continues to show a formidable correlation to the SP 500 (0.88 on rolling 20-day studies) and we are leery of selling the pair considering the index has just hit another record high.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com