USD/JPY is doing battle in between the key daily moving averages
The dollar is keeping mild gains against most major currencies still but it holding weaker against the yen in the session so far. EUR/USD is still settling around 1.1000 after a move down earlier while USD/JPY has moved up a little off lows of 108.24 to 108.80 currently.
For USD/JPY, the key area to watch is the 200-day MA (blue line) @ 108.33 today.
Sellers are looking to break below that to establish a more bearish bias in the pair but for now, the dollar is putting up some resistance as we have seen on the session.
A move back above the 100-day MA (red line) @ 109.03 will give buyers more encouragement but the key hourly moving averages still sit far away at 109.77 and 110.51. Hence, sellers are firmly in near-term control right now.
Amid the outflows in the dollar this week, the price action here to me is arguably what may make or break the dollar - or even the yen - in week ahead.
Equities have done well to recover on the week - although they appear to be struggling ahead of the weekend for now - but with the economic situation across the globe still rather dire, there is still reason to expect some selling pressures down the road.
The previous selloffs were marked by liquidation trades and a rush to the dollar. However, after the Fed action this week, perhaps the yen will start to come back into favour now.
So, if we do see another bad period in the market, the yen could stand to benefit strongly from it. And in the case of USD/JPY, a key break under the 200-day MA could set off further downside towards 105.00 - especially if the fundamentals align.
