- USD/JPY correction from lows proved to be short-lived, the pair rejected at highs.
- Price has edged lower from session highs at 109.83. We see scope for further downside on close below 21-EMA.
- US dollar caught bid after US President Trump said that there is still a chance of the June 12th North Korea summit taking place.
- That said the pair will remain vulnerable to safe-haven flows supporting the yen.
- We see major support around 108.20 which is nearly converged 50 and 100 day MAs.
- Close below 21-EMA at 109.61 could see test of 108.20 levels. Major weakness likely on break below.
- On the upside, 200-DMA is major resistance at 110.17. Break above could see some meaningful gains.
- Technical indicators do not show any clear directional bias. However, bearish divergence keeps scope for downside in the pair.
- For the week ahead, focus will be on nonfarm payrolls. We also have ADP private employment and Q1 GDP, second estimate (Wednesday).
Support levels - 109, 108.81 (38.2% Fib), 108.20 (nearly converged 50 and 100 day MAs)
Resistance levels - 109.80 (converged 5-DMA and 23.6% Fib), 110. 110.17 (200-DMA)
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