Daily Pivots: (S1) 109.79; (P) 110.00; (R1) 110.21; More…
USD/JPY’s break of 109.54 suggests that fall from 110.89 has resumed. Such decline is seen as the third leg of the consolidation pattern from 111.39. Intraday bias is back on the downside for 108.10 support 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, above 110.89 will extend the rise from 108.10 towards 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.
