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Talking Points:
- USD/JPY Technical Strategy: Flat
- Support: 106.63, 105.57, 104.50
- Resistance: 107.95, 108.76, 110.08
The US Dollar stalled to digest losses against the Japanese Yen having dropped to the lowest in a month. Near-term support is at 106.63, the 38.2% Fibonacci retracement, with a break below that on a daily closing basis exposing the 50% level at 105.57. Alternatively, a turn back above the 107.64-95 area marked by trend line resistance-turned-support set from May 2013 and the 23.6% Fib at 107.95 clears the way for a challenge of the 14.6% retracement at 108.76.
Prices are too close to support to justify entering short from a risk/reward perspective. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. With that in mind we will remain flat for now.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com