USDJPY could not retain its strength above the 107.40 barrier which looks to be the neckline of a double bottom pattern in the four-hour chart, with the price reversing lower instead.
While the RSI and the MACD remain muted near their neutral levels, providing little evidence that the pair could pick up momentum, the formation of a bullish hammer candlestick on Friday followed by a sizable green candle suggests that the bulls have not put the guns down yet.
A close above the 107.40 neckline and the 200-period simple moving average (SMA) could bring buyers back into play, pushing resistance up to 107.70. A steeper rally could re-challenge the 108.00 round-level, where the price stalled earlier this month, while higher, the next stop could be around 108.50 – a key obstacle in the month of June.
Alternatively, if sellers remain in charge, driving the price below 106.93, all eyes would turn back to the 106.63 bottom. A violation at this point could raise selling appetite, bringing the 106.35 support next into view. Still, a drop below 106.00 could prove to be more important as such a move would push the pair out of the four-month old range zone.
Summarizing, USDJPY could face weak momentum in the near-term unless it crawls above 107.40 or dives below 106.93.
