FxWirePro: USD/JPY breaks 50-DMA support, more downside in store, good to go short on rallies

Technical Analysis:

• USD/JPY bears firmly in control, break below 50-DMA has opened scope for further downside.
• The pair is consolidating overnight losses, hovers around 113 handle.
• Techs are biased lower, momentum studies are bearish.
• On the weekly charts, RSI and Stochs have rolled over from overbought levels and MACD line is on verge of a bearish crossover.

Fundamental Factors:

• US dollar was also sold off on Trump's comments that USD is too strong in comparison to the Yuan in particular.
• Trump stimulus and tax reform hopes diminishing by the day, US interest rates slip with the 10yr down 5bp to 2.347%.
• However, the Fed's assertive tightening projections plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar.
• Focus will be on U.S. economic data including CPI, industrial production, and the Beige Book.
• Trump’s inaugural speech on Friday could impact the markets. 

TIME  TREND INDEX  OB/OS INDEX    

1H    Bullish          Neutral    
4H    Neutral         Neutral        
1D    Bearish        Neutral        
1W   Neutral         Neutral  

Support levels - 112.96 (converged 1H 5&20 SMA), 112.60 (Jan 18 low), 112 

Resistance levels - 113.80 (5-DMA), 113.97 (23.6% Fib of 98.78 to 118.66 rally), 114, 114.31 (50-DMA)

Recommendation: Good to go short on rallies around 113.10/30, SL: 114.10, TP: 112.60/ 112/ 111.35