Daily Pivots: (S1) 109.54; (P) 110.07; (R1) 110.60; More…
Intraday bias in USD/JPY remains neutral for the moment. We maintain the view that corrective pattern from 111.39 is unfolding with fall from 110.89 as the third leg. Deeper decline is expected and below 109.54 will target 108.10 and possibly below. But, we’d expect strong support from 61.8% retracement of 104.62 to 111.39 at 107.20 to contain downside and bring rebound. On the upside, though, above 110.89 will bring retest of 111.39 instead.
In the bigger picture, at this point, we’re slightly favoring the case that corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Above 111.39 will affirm this view and target 114.73 for confirmation. However, it should be noted that USD/JPY is bounded in medium term falling channel from 118.65 (2016 high). Sustained break of 61.8% retracement of 104.62 to 111.39 at 107.20 will likely resume the fall from 118.65 through 104.62 low.
