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USD/JPY testing the bulls wits below 108 handle

FXStreet (Guatemala) - USD/JPY is trading at 107.62, down -0.50% on the day, having posted a daily high at 108.37 and low at 107.61.

USD/JPY has shied away from the 108 handle in a decisive drift to the downside that was exacerbated on poor US data US pending home sales growing just 0.3% in September versus the 0.5% gain expected. The yen is strong and without there being much in the way of a catalyst, the dollar has started to come off vs the Japanese currency at the start of this week. Analysts at TD Securities explained that despite having found support at the 50% retracement point (of the 101/110 rally) in the middle of the month, USD/JPY’s rebound may be running into trouble.

“Spot remains below the August/October trend price action today may be signalling a correction to the correction; a weak close today will combine with price signals from late last week to form a bearish “evening star” top/reversal around the low 108s. It is possible that the mid-October rebound is no more than a consolidation of the 110/105 drop (potential bear flag signal in development). Look for renewed weakness in the USD below 107.25/35 in the next few days.

USD/JPY noteworthy levels

Current price is 107.62, with resistance ahead at 107.85 (Daily Classic S1), 107.90 (Hourly 20 EMA), 108.09 (Daily Classic PP) and 108.40 (R1). Next supporting zones to the downside can be found at 107.59 (Weekly Classic PP), 107.54 (Hourly 100 SMA), 107.52 (Daily 20 SMA /S2) and 107.29 (S3).

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