- USD/JPY has closed below 200-DMA on Friday's trade, supporting our call for further downside.
- The pair hit fresh monthly lows of 110.76, before paring losses to retake the 111 handle.
- Data released earlier today showed the decline in the Japanese manufacturing growth hit eight-month low.
- Further, the Bank of Japan (BOJ) has reduced the purchases of 5 to 10 year JGBs to JPY 470 billion from the previous figure of JPY 500 billion, weighing on the yen.
- Technical studies are bearish, we see the major on track to test 110.95 (June 22 low) and then 109.25 (channel base).
- Consecutive spinning top and doji formations on daily candles last week, followed by close below 200-DMA and a 'Death Cross' formation support downside.
- Bearish invalidation only on decisive breakout above 200-DMA at 111.86.
Support levels - 110.95 (June 22 low), 110.23 (May 18 low), 110, 109.25 (channel base)
Resistance levels - 111.59 (5-DMA), 111.65 (50-DMA), 111.85 (200-DMA)
Call update: Our previous call (http://www.econotimes.com/FxWirePro-Possible-Death-Cross-on-USD-JPY-go-short-on-decisive-close-below-200-DMA-815003) is progressing well.
Recommendation: Bias lower. Stay short for targets.
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