USDJPY hit a three-week low of 111.68 during yesterday’s trading. The pair experienced significant declines since reaching a four-month high of 114.49 on July 11.
The RSI is currently at 46, close to the 50 neutral-perceived level. In addition, the indicator has flatlined, projecting neither a positive, nor a negative intra-day direction.
On the upside, the area around the 38.2% Fibonacci retracement level (June 14 – July 11 upleg) at 112.30 could provide resistance. Further up, the 113 handle, combined with the 23.6% Fibonacci mark at 113.13, might form an additional resistance area.
On the downside, the 200-day moving average (MA) and 50% Fibonacci level, ranging from 111.97 to 111.63, could offer support. Notice that this range also encapsulates the current level of the 50-day MA as well as yesterday’s three-week low. Moreover, bear in mind that the 200-day MA was briefly violated today. Should the price continue declining, the 61.8% Fibonacci mark at 110.96 would be eyed next.
In the wider picture, the pair has recorded a bearish cross this week when the 50-day MA moved above the 200-day one. This is generally perceived as a positive medium-term signal. However, it is too early to judge the strength of this signal – a move below both MAs would reinforce it. For the time being, the pair remains predominantly neutral in the medium-term given the significant sideways movement since the start of the year.
