USD/JPY Daily Outlook

Daily Pivots: (S1) 105.18; (P) 105.86; (R1) 106.70; More.

USD/JPY's outlook remains mixed as the pair is still bounded in established range of 103.54 and 108.02. Strength in dollar and yen are still countering each other. The question remains on whether rebound from 95.77 has completed and is still in progress. The corrective nature of the price actions from 110.66 and those from 103.54 give not much hint to that. A break of the range of 103.54 and 108.02 is needed to clear the picture.

On the upside, above 108.02 will favor the case that fall from 110.66 is merely correction to whole medium term rebound from 95.77. In such case, stronger rise should be seen to retest this 110.66 high first. On the downside, below 103.54 will reinforce the case the correction from 95.77 has completed and deeper decline should be seen to retest this low.

In the bigger picture, note that upside momentum is seen diminishing with bearish divergence condition in daily MACD. Even though the rise from 95.77 might extend further, a top is still expected to be around the corner. Upside will likely be limited by 61.8% retracement of 124.13 to 95.77 at 113.30 to complete rise from 95.77. Meanwhile, sustained break of 103.54 will confirm that such rebound has completed and the whole down trend from 124.13 is possibly ready to resume in such case.

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