USD/JPY barely in positive territory

USD/JPY is up just 2 pips at 122.39 after rising as high as 112.91 early in US trading. The combination of falling oil prices and deteriorating risk sentiment are hurting the pair.

Technically, it completed the reversal of the March 17 declines but failed to break the March 17 high of 112.96. That's a key level now (along with 113.00).

Trendlines from the March highs are also in place but are likely to offer only light resistance.

Despite four days of gains, the dominant features on the chart all point to the downside. The Fed helped to break the Feb double bottom and the bounce from the 15-month low of 110.66 hasn't been particularly inspiring.

I expect the next move will be driven by risk sentiment. My suspicion is that stock markets are stretched after a 10% rally since mid-Feb.

On the economic calendar tomorrow, the durable goods report is the highlight along with the Markit services PMI and initial jobless claims. It's a long weekend so the moves might have to wait until next week.