Strong downside risks prevailed early on Wednesday which resulted in USD/JPY falling 93 pips until late in the evening when this bearish sentiment reversed back to the upside. Significant advances did not follow, being halted by the combined resistance of the 55-, 100– and 200-hour SMAs circa 110.90.
It is likely that the rate lacks the necessary upward momentum to dash through this cluster today, as no important fundamental data releases that could add bullish momentum are not scheduled today. In line with this bearish scenario, the US Dollar is should be pushed back down to the bottom boundary of a five-week falling wedge at 110.00.
In the unlikely event that the rate breaches 110.90, another important resistance is the breached channel line and the weekly R1 at 111.50.
