- USD/JPY opened with a bullish gap, but failed to extend recovery.
- The pair faded a spike to 107.19 and has slipped lower to currently trade at 106.61 levels.
- Markets have largely ignored dovish comments from Bank of Japan (BOJ) Governor Kuroda.
- Kuroda was out on wires earlier, stressing the need for continued powerful easing.
- Technical studies are bearish. RSI and Stochs are biased lower. Price action remains below cloud and major moving averages.
- We see strong trendline support at 106.50. Break below could see further weakness.
- Treasury yields could influence direction. Also, traders will look to new Fed Chair Powell's testimony to Congress (due later today) for clues regarding the path of rate hikes this year.
Support levels - 106.50 (trendline), 106, 105.55 (Feb 16 low)
Resistance levels - 107.05 (5-DMA), 107.71 (23.6% Fib), 108.03 (20-DMA)
Recommendation: Good to go short on break below 106.50, SL: 107.10, TP: 106/ 105.55/ 105.30.
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