Technical Analysis

USD/JPY near-term bias stays neutral as risk remains jittery to start the day

Price continues to sit between the 100 and 200-hour moving averages


The break of the near-term trendline support saw price fall back below the 100-hour MA (red line) in trading yesterday but sellers were unable to search for a move below the 6 February lows around 109.60. For buyers, more importantly, price is holding above the 200-hour MA (blue line) which means that the near-term bias isn’t turning more bearish yet.

That said, risk sentiment isn’t lending a hand to buyers as they seek to recapture near-term control of the pair. Asian equities are weighed lower as a result of Wall Street’s poor performance overnight and US equity futures are also still slumping to start the day with E-minis down by 0.5%:

E-minis 08-02-19

Given that backdrop, buyers are finding it tough to crack back above the 100-hour MA as price has been rejected on three occasions already since overnight trading. As it stands, the upside for the pair looks rather limited with the 110.00 handle still holding firm. That will almost certainly continue as trade talks are left hanging now with Trump and Xi not going to meet before the March deadline.

Looking ahead, be wary of a potential break below the 200-hour MA near 109.50 on an extended case of risk aversion. If sellers breach that level, expect more downside pressure to follow towards the 22 January support @ 109.15 and the 109.00 handle.

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