The USD/JPY exchange rate weakened 0.4% on Thursday following a test of the 200-day SMA, weekly R1 and 61.80% Fibonacci retracement at 110.20. As a result, the pair breached two SMAs on the hourly time-frame, but has nevertheless remained stranded between the 100– and 200-period (4H) SMAs in the 109.60/85 range this morning, as well.
A breakout may occur in any direction; thus, two scenarios should be considered. The most probable daily low is the 109.40/35 mark, as the 55-period and 200-hour SMAs, the weekly PP and a channel line are located there.
Conversely, gains should be capped near the aforementioned 110.20 level due to the 200-day SMA being located there. Technical indicators are more in favour of the bullish scenario.
