USDJPY has been neutral both in the short and medium term. Since late September the pair has been trading in the upper half of the 9-month range between 111 and 114. The market does not have any clear direction and this lack of trend is indicated by the horizontal 50-day and 200-day moving averages.
Near-term risk has moved to the downside after prices fell back below the 50-day MA earlier this week. However, further downside may be limited as long as support is being provided by the 200-day MA at 111.65. Below this, the 111 level is expected to provide support as well.
A daily close below 111 would suggest the start of a bearish phase to target the bottom of the medium-term range at 108. This scenario seems unlikely if USDJPY can move and stay above 112 in the next few sessions.
The market needs to cross back above the 50-day MA to find momentum to target the top of the range at 114. In the meantime, the neutral bias is expected to remain in the near term.
