USD/JPY looks to snap four straight days of gains after bouncing from lows of 105.55 this year
The pair has gained over 200 pips in the process over the last four trading days, but is now retreating after touching a high of 107.90 yesterday.
The topside stall coincides with the 61.8 retracement level on the daily chart and for now, that will prove to be the level buyers will have to break through in a bid to send the pair higher.
Meanwhile, the lows for the day encountered support by buyers at the 200-hour MA (blue line) - so that will be a level to watch for price action for the time being.
So, what's next for USD/JPY?
To the topside, the resistance near 108.00 levels will be key. If that breaks, the next level to look out for is the 110.00 level. Meanwhile, a move to the downside requires sellers to break back below the near-term MAs first to validate another run towards the 105.00 levels.
The drop so far today was rather stark and Eamonn outlined a good host of reasons in his post here.
Although it's something that I'm sure has begun since the start of the year, I would be looking out for one of the reasons Eamonn pointed out. Which is the repatriation back to the yen over the next month as the Japanese fiscal year comes to an end in March. That will be yen supportive, and if the amounts are huge could cause some spikes in the yen during the day.
And the last two days we've seen some wonky action in the Nikkei futures as well - today down 1.23%, and that's putting a drag on the Nikkei in return, which is down 1.06% so far. That's also something to look out for that will influence price action.
The flipside to all of this will be US yields. 10-year yields are now at 2.93%, a little off the highs yesterday but it's something to look out for if it starts heading closer to 3% or even exceeding it. By right, that should be positive for the dollar but the correlation recently has broken down and if it is starting to realign again, it's going to make for a very painful trade for dollar shorts against the yen.
