FxWirePro: USD/JPY channel breach raises scope for further downside, 108.16 next bear target

• USD/JPY beaten down below 110 handle as US dollar remains on the back foot across the board.
   
• Dollar resumed weakness after Treasury Secretary Steve Mnuchin crossed the wires saying that a weaker USD is good for the US.
   
• Further bearish sentiment around the pair was heightened by upbeat Japanese Manufacturing PMI which rose to the highest level since Feb 2014 in Jan.
   
• USD/JPY slumped lower to hit fresh 4-month lows at 108.96 before paring some losses to close at 109.21.
   
• Downside continues on the day as we head into the EU session. Technicals still appear heavily bearish.
   
• Price currently holds above 78.6% Fib support at 108.90. Break there will see further downside.

Support levels - 108.90 (retrace of 107.318 to 114.737 rally), 108.60 (Aug 18 low), 108.26 (Aug 29 low), 108.16 (88.6% Fib)

Resistance levels - 109.80 (channel base), 110.05 (5-DMA), 110.15 (61.8% Fib)

Call update: Our previous call has hit all targets.

Recommendation: Book partial profits, trail stop loss to 109.90, watch for break below 78.6% Fib, target 108.60/ 108.30/ 108.15.

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -142.022 (Bearish), while Hourly JPY Spot Index was at 25.1978 (Neutral) at 0430 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex. 

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